Investing: putting savings to use

Stocks Share of ownership in a corporation How do investors earn money from stocks: Dividend payments Sale of the stock for a higher price that it was purchased for “capital gains”

Trading stock Stock brokers buy and sell stock for their customers Trade on stock exchanges New York Stock Exchange Option: right to buy or sell stock at a future date for a preset price

Tracking performance Stock index: measures and reports the change in price of a set of stocks Dow Jones Industrial Average S & P 500 NASDAQ composite Bull Marker: period when stock prices rise Bear Market: period when stock prices fall

Bonds Contracts issued by a corporation or government to repay borrowed money, plus interest, on a fixed schedule. Bond holder receives interest every year Coupon rate

Bonds continued Types: Municipal Issued by state and local government Junk bond Issued by corporation Higher risk Treasury Issued by Federal Government Very low risk

Other types of investments Mutual funds Pool of money from many investors managed by an investment company used to purchase wide variety of assets Certificate of deposit (CD) Investor receives interest from bank Risk: investor can lose out if interest rates go up

Smart Investing Diversification Purchasing many different financial assists to minimize risk Risk vs. Return Riskier investment: higher potential return Safe investment: lower rate of return Young: can afford to be risky Older: want to be more safe