Advice, Information, and Transactions

Focus Questions

1. How can people learn more about investing?2. Where can investors find written information about a

particular company and its stock?

• A broker works for a company called a brokerage firm.

• A full service broker will provide clients with investment information and advice on how to invest.

• A discount broker works mainly with investors who need little advice.

• Discount brokers charge less than full service brokers

• They do not provide the knowledge base or the advice that a full service broker offers

• http://www.ml.com/index.asp?id=7695_15125

• https://www.tdameritrade.com/home.page

• A financial adviser, or financial planner, has the knowledge and capability to give extensive advice.

• Financial advisers tailor their advice to fit the individual client’s financial goals, stage in life, income, budget, family situation, assets and liabilities, and other factors

• Many charge an hourly rate• Some charge varying fees for different services• Still others charge a commission on the sales they make on

behalf of the client

Choosing a Financial Planner

• Select someone you can trust• Understand the person’s educational background and

experience• Is the person licensed?• What type of investing does the person seem to prefer?• Will the person take risks that I’m uncomfortable with, or

fail to listen to my input?• What are his or her specialties, or areas of expertise?

Publications and Web Sites

Wall Street Journal, Money, and Forbes provide financial information and analysis of stocks and other investments.

http://online.wsj.com/home-pagehttp://money.cnn.com/

• Standard & Poor’s and Moody’s Investors Service also offer financial planning publications with useful information on investing

• All publicly traded companies publish four quarterly reports and an annual report containing financial information about the company

• http://www.sec.gov/

Other online resources

Motley Foolhttp://www.fool.com/

National Association of Investors Corporationhttp://www.betterinvesting.org/public/default.htm

TeenVestorhttp://www.teenbusiness.com/

Getting Started

• The two main ways of investing for the first time are to buy stocks or mutual funds

• If you are younger than 18, your mutual fund account will probably be a custodial account – one that you open with a parent or guardian

• The fund manager makes all the decisions

Investing in the stock market

• Open an account with a discount broker • Buying and selling stocks online is easy• Do your research • A fee for each transaction you make

Stock market games

• http://www.wallstreetsurvivor.com/• http://www.marketwatch.com/game/

Deciding which stocks to purchase

• Think about which companies’ stocks might rise in value• Evaluate your information and reasoning• Make sure you have good evidence behind your decisions• Keep track of news about business and the economy

• For example, if fuel prices are falling, you might decide that automobile manufactures of trucks and suvs might realize bigger profits

Assessment

1. What type of broker is likely to provide financial advice?2. How are financial advisers paid?3. Name at least three specific sources of financial information.4. How much money should you have to begin investing?5. What is a custodial account?6. When you are choosing a financial planner, why is it important

to select someone you can trust?7. Stocks and mutual funds are two places to invest your money.

What might be the advantages of in investing in bonds?