Chapter 11 Saving and Investing Options. Slide 2 What Are Good Financial Market Investments? A mutual fund is a professionally managed group of investments.

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Presentation transcript:

Chapter 11 Saving and Investing Options

Slide 2 What Are Good Financial Market Investments? A mutual fund is a professionally managed group of investments. It is bought using a pool of money from many investors Medium-Risk Choices A personal residence (home) is typically a safe investment and good tax shelter.

Slide 3 Asset Allocation in a Mutual Fund 11-2 Medium-Risk Choices ASSET ALLOCATION Percent of HoldingsType of FundReason for Choice 20%Bond fundFor stability and to offset risk of other funds 20%Growth fundTo invest in high-risk choices that could grow greatly over time 20%Global fundTo benefit from world economic growth 20%Money market fund To provide liquidity and short-term gains 15%Income fundTo receive income in the form of dividends 5%New venture fundTo invest in emerging, young businesses that could become highly profitable and provide a high return

Slide 4 What Are Individual Retirement Account Options? 11-2 Medium-Risk Choices An IRA allows you to deposit money into an account during your working years and withdraw it upon retirement. SEP accounts are tax- deferred retirement plans for small businesses. Keogh accounts are tax-deferred retirement plans for self-employed professionals, such as doctors and lawyers.

Slide 5 What Retirement Plans Are Available through Employers? 11-2 Medium-Risk Choices Defined-contribution plans o 401(k) plans: tax-deferred plans for profit-seeking businesses o 403 (b) plans: tax-deferred plans for government and nonprofit organizations Defined-benefit plans o Pension plan Retirement accounts may be portable, meaning you can take the account with you when you leave a job.

Slide 6 Success Skills 11-2 Medium-Risk Choices Set up a spreadsheet to show purchase price and change in value of investments. Track investments over time. Use it to compare investments. Use it to help decide when to change your investment strategy. Use Excel ® to get updated stock quotes. Tracking Investments Using a Spreadsheet