Small steps to accomplish great things!

Subject: Seminar & Business Communication Faculty name: Sir. Shahbaz Date: 25/05/2013

By Ahmad Amirali GR# 2201055

It is our attitude at the beginning of a difficult task which, more than anything else, will affect its successful outcome.
William James American philosopher

Types of common investments

Risks of investing
Simple ways to minimize risk

Types of common investments

Cash Cash equivalents (CDs, Treasury bills) Bonds Stocks Mutual funds Retirement accounts

Cash
Checking account Savings account

The most powerful force in the universe is compound interest.

Albert Einstein

Cash equivalents
Certificates of deposit Treasury bills Money market accounts

Bonds
Corporate bonds Municipal bonds Government bonds

Stocks Mutual Funds

Risks of investing
Investment risk Market risk Liquidity risk Interest rate risk Credit risk Inflation risk

Simple ways to minimize risk

Diversification Asset allocation Rebalancing

Diversification
*Diversification does not assure a profit or protect against an investment loss.

Cash Stocks Bonds

Asset allocation
*Asset Allocation does not assure a profit or protect against an investment loss.

Younger investor 10% 10% 10%

Older investor

40%
80% 50%

40%

20% 40%

Rebalancing
*Rebalancing does not assure a profit or protect against an investment loss
Stocks $1,000 Bonds $1,000

after one year

Stocks $1,100 Bonds $1,000

rebalanced
Stocks $1,050 Bonds $1,050

Putting your knowledge to use

Now that you have an understanding of the basics, Im going to give you a practical example of how to use this knowledge. If for example X began by putting 5% of every paycheck into savings account. Once he had enough, he took half of his savings account and invested it in a Treasury-bill. Liquidity was not a concern for X because he still had some money in his savings account for a rainy day. When the Treasury-bill matured he collected his money. X kept putting money into his savings account after he invested in the t-bill. Since his money had increased, he took out half of the money in his savings account. X also had his original investment from the t-bill and the return that he earned from his investment. By adding up these amounts, X decided to put money into a mutual fund. He was concerned about keeping his money safe, so he chose a relatively low risk mutual fund that was very diversified. He waited a few years: during this time his investment decreased and increased but he did not worry. He knew that investing in mutual funds is for the long term and you cannot worry about the minor fluctuations in value. He also kept taking some money from his savings account and invested that into the mutual fund as well. X used his knowledge about investments, risk, and diversification to save money for a house and he was successful. In time, X had enough to put a down payment on his house. He still has money in his savings account that will help in case he must repair something.

Thank You