Investing FBLA

Stocks

Units of ownership in a company

Bonds

lending money to gov or company for interest payments over an interval of time (loan)

Mutual Funds

pooling your money into a fund to invest in many different investments (you put some money in and planners will invest for you and diversify)

ETFS

Similar to Mutual Funds but can be traded like stocks

Real Estate (REITS)

Investing in property for appreciation and capital gain

Commodities

Raw materials like gold, oil, agricultural goods

Cryptocurrencies

Digital currency protected by cryptography (volatile)

Speculative Investments

High risk/ High Return; used for short term gains

Define liquidity of an investment.

How easily an investment can be converted into cash without significantly affecting its price

Explain how to buy and sell stocks/etfs

Stocks/ETF’s : bought through brokerage accounts or placed orders on exchanges

Explain how to buy and sell bonds

Bonds: Can be bought from gov directly or brokerage and second hand markets

Explain how to buy and sell MF

Mutual Funds: bought directly from fund companies or brokers

Explain how to buy and sell real estate

Real Estate: Bought with real estate agent usually involves down payment and mortgage

Explain how to buy and sell crypto

Crypto: bought via exchanges like Coinbasse, Bifinance, etc

Compare the difference between simple and compound interest

Simple Interest is earned on principal only; Compound interest is earned on principal + accrued interest (exponential)

Explain what agencies regulate financial markets and protect investors.

Securities and Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA), Federal Reserve, Commodity Futures Trading Commission (CFTC)

SEC

protects investors from fraud and regulates stock market

FINRA

Oversees brokerage firms and exchanges

Federal Reserve

Regulates interest rates and US monetary policy

CFTC

Commodity Futures Trading Commission: regulates commodity futures and options markets

Evaluate professional financial advisors.

• Credentials

• Experience

• Fees

• Fiduciary Duty

Define bonds and the interest earned.

Bonds are money loaned to government or corporations. And they pay a certain amount of interest on top of the money you gave. Once the bond matures you get the face value. (coupon rate refers to annual interest earned)

Explain real estate as an investment possibility.

Real estate often appreciates in value, you can also use rental income. REITs also allow investors to buy in the real estate market without actually owning property.

Define speculative investments.

Investments that are volatile, with high possible return and not very liquid

Explain how the level of risk is associated with the possible rate of return on an investment.

If there is a higher risk then there is a higher possible rate of return since investors demand compensation. If there is a low risk the possible rate of return is lower.

Explain how broker and investment planner fees are calculated.

• Flat Fee: Set fee for services

• Hourly Fee: Some charge by the hour for consultations

• Comission-based: money earned based on products they sell

• Percentage of Assets under Management (AUM): fees are based on total percentage of investment

Explain the importance of estate planning.

To ensure that assets are distributed correctly without any conflicts. Helps minimize taxes and protect beneficiaries.

Explain the need for wills to distribute investments of a deceased person.

So all the assets are distributed they way they want them to be, without having battles

different types of stocks

• common stock

• preferred stock

• blue-chip stocks

• penny stocks

• cyclical stocks

• defensive stocks

• international stocks

• sector stocks

common stock

no fixed dividend but voting rights (partial ownership of company)

preferred stock

fixed dividend but no voting rights

blue-chip stocks

stocks from well established companies/corporations

penny stocks

shares that are under $5 per share, often from startups. Very volatile but potential for massive returns (short term)

cyclical stocks

stocks that rely heavily on the economy’s conditions (automobiles, luxury goods, airlines). provides stable returns when the market is good but during recessions you can lose a lot

defensive stocks

Shares in industries/companies that everyone will always need like healthcare (stable returns but lower than cyclical stocks)

international stocks

when you buy stocks in markets outside of your home country. Considered volatile since they’re prone to political instability and different conditions. Potential for high returns especially if you invest in a fast growing market.

sector stocks

stocks in companies that fall under the same industry like healthcare or technology that can be influenced and have different returns based on their conditions.