Economics Unit 6 (Chapter 14) #3

International Investing

Offers diversification benefits and growth opportunities

Global Funds

Invest in both U.S. and foreign companies

International Funds

Invest exclusively outside the United States

Regional Funds

Focus on specific areas (Europe, Asia, etc.)

Country Funds

Invest in specific countries

American Depositary Receipts (ADR)

Represents foreign stocks trading on U.S. exchanges

What Affects Returns?

Currency exchange rates, political risk, and regulatory differences

Real Property

Includes land, buildings, and permanently attached structures

Residential Real Estate

Consists of individually owned dwellings (houses)

Commercial Real Estate

Includes income-producing properties like offices and retail

Real Estate Investment Trusts (REIT)

Allows indirect real estate investment

Equity

The difference between a property’s market value and outstanding debt

Real Estate Risks

Include decreased property values, foreclosure, and tenant issues

Underwater Mortgage

Occurs when debt exceeds property value

Collectibles

Include jewelry, art, stamps, coins, and other tangible assets

Hard Assets

Include gold, silver, platinum, and other physical commodities

Tangible Investments

Generally have higher marketability risk than securities;

Generally suitable only for high-risk tolerance investors

Dealer Spread

The difference between buy (bid) and sell (ask) prices

Auctions and Pawnshops

Provide marketplaces for collectibles

Financial Advisors

Provide guidance on investment and financial planning

Fiduciary Advisors

Required to act in client’s best interests

Compensation Structures

Include fee-only, commission-based, and fee-based

Investment Fraud

Includes Ponzi schemes, pyramid schemes, and other scams

Due Diligence

Involves verifying investment claims and advisor credentials

*Warning Signs of Fraud

Include unrealistic returns and pressure tactics