Investment Terms to Know
   • Investment: The commitment of funds to one or 
    more assets that will be held over some future time 
    period
   • Risk: The chance that the actual return will be different 
    from the expected return
   • Passive Investment Strategy: A strategy that 
    determines initial investment proportions and assets and 
    makes few changes over time
   • Active Investment Strategy: A strategy that 
    seeks to change investment proportions and/or assets in 
    the belief that profits can be made
        More Terms to Know
  • Direct Investing: Investors buy and sell securities 
    themselves, typically through brokerage accounts.
  • Indirect Investing: The buying and selling of the 
    shares of investment companies, which, in turn, hold 
    portfolios of securities
        Why Should I Invest?
   • Retirement: Investment in the long-term which 
    means you can ride the market
   • Large Purchases (House): Invest in safer 
    securities (Short-term)
   • School: Invest in safer securities, the sure 
    investments
               What Can I Invest In?
     • Money Market                  • Equity Securities:
       Securities:                      – Stocks
        – Treasury Bill              • Derivative Securities:
        – Negotiable CDs                – Options
     • Fixed-Income                     – Future Contracts
       Securities:
        – Bonds
        – Asset-Backed 
          Securities
     Diversification is KEY
  • Diversification is the key to the 
   management of portfolio risk because it 
   allows investors to significantly lower 
   portfolio risk without adversely affecting 
   return!
  • International diversification is important
  • A portfolio with 40 different stocks is said 
   to be adequately diversified