170x Filetype PPT File size 0.03 MB Source: gustavus.edu
Investment Terms to Know • Investment: The commitment of funds to one or more assets that will be held over some future time period • Risk: The chance that the actual return will be different from the expected return • Passive Investment Strategy: A strategy that determines initial investment proportions and assets and makes few changes over time • Active Investment Strategy: A strategy that seeks to change investment proportions and/or assets in the belief that profits can be made More Terms to Know • Direct Investing: Investors buy and sell securities themselves, typically through brokerage accounts. • Indirect Investing: The buying and selling of the shares of investment companies, which, in turn, hold portfolios of securities Why Should I Invest? • Retirement: Investment in the long-term which means you can ride the market • Large Purchases (House): Invest in safer securities (Short-term) • School: Invest in safer securities, the sure investments What Can I Invest In? • Money Market • Equity Securities: Securities: – Stocks – Treasury Bill • Derivative Securities: – Negotiable CDs – Options • Fixed-Income – Future Contracts Securities: – Bonds – Asset-Backed Securities Diversification is KEY • Diversification is the key to the management of portfolio risk because it allows investors to significantly lower portfolio risk without adversely affecting return! • International diversification is important • A portfolio with 40 different stocks is said to be adequately diversified
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