ABC Investing

By Shobha Narasimha

ABC Investing

http://simulator.investopedia.com/

What is Investing?

Why to invest?

What is the catch…..?

Risk

Risk Of losing money

1929

- 19

32

1937

-194

2

1906

-190

7

1890

-189

6

1919

-192

1

1901

-190

3

1973

-197

4

1916

-191

7

2000

-200

2

2008

-200

9

-100%-90%-80%-70%-60%-50%-40%-30%-20%-10%

0%

Largest US stock Market Decline

Series 1

Things to Consider

Time Horizon

Risk

Rate of return Risk Liquidity Risk

Why not keep money under bed?

Inflation

Inflation

Type of InvestmentBank Checking – Saving - CD -

Interest taxable, penalty for early withdrawal

Bonds

Short Term < 3 year

Intermediate Term - 3 – 10 years

Long Term > 10 years

BondsTreasury bonds – state tax free, federal tax,

$1000 multiples, can be traded Treasury bills < 1 year Treasury notes - 1 …10 years

Treasury bonds > 10 years

BondsSaving Bonds – Non transferable

TIPS - Inflation adjusted, 5 – 10 years

Municipal bond – federal tax free and tax free for state residents

Saving BondsCan be bought directly at treasuarydirect.gov

Low minimum – 25,50,75, 100,200,500

Non transferable

EE bonds and I bonds (Inflation adjusted)

Might be tax free if it is used for higher education

Bonds

Corporate Bond

A……………………………Z alphabet soup

Mortgage Bond

Mutual FundMutual Fund - Bond, Stock, Money Market

Expense ratio

No load fee

Diversification

Vanguard, TRow Price

Where to Buy ?Discount brokers

Scottrade.comEtrade.comwww.schwab.com

Portfolio and Asset Allocation

30%

10%

7%10%

20%

5%

10%

8%

Portfolio Stock

Treasury Bills

Treasury bonds and notes

international fund

Gold

REIT

Mutual fund - bond

Mutual fund - large value