Transcript Investing in Mutual Funds or Real Estate Chapter 14 Notes

Investing in Mutual Funds or Real Estate
Chapter 14 Notes
Mutual Funds

This is the most popular investment alternative out there! Here are the basics:
 _____________________________________________________________________________________
__ __________________________________________________________________________________.
 The investment company that manages the fund ______________________________________________
____________________________. They charge a _____________________________ for their services.
 Professional fund managers buy and sell based on the ______________________________________ and
______________________________________________.
Why Investors Purchase Mutual Funds

________________________________________!
 You don’t have to worry about following the stock and bond markets, or about looking for hot new
investments. Professionals are doing the work for you.

________________________________________!
 When you invest in funds, you are diversifying because mutual funds purchase numerous and diverse
stock and bond issues.

________________________________________!
 You can turn your money into cash whenever you need it (unless, of course, the fund is part of some type
of retirement account).

________________________________________!
 You can get a great rate of return without as much risk as you would have with investing in individual
stocks.
Types of Mutual Funds

Individual funds have different investment goals and strategies. You should choose funds that have goals and
strategies that match your own.

There are many different types of funds to choose from including: Growth, income, balanced, bond, global and
index funds.
 Growth Funds
 A ___________________________________________________________________________
_________________________________. They are considered more risky but can really hit big.
 An ____________________________________________________________________________.
These are even more risky but can lead to massive returns if they hit.
 Examples of some of the top growth funds can be seen at:
http://www.marketwatch.com/tools/mutualfunds/100index.asp?tf=9&view=2&siteid=mktw
 http://www.marketwatch.com/tools/mutualfunds/overview.asp?siteid=mktw&symb=FMILX&sid=
9964
Income Funds

An _____________________________________________________________________________________
________________________________________________________________________________________.

The goal of these types of funds is current dividend income. _______________________________________
___________________________________.

Sometimes you see combination funds like a Growth-income fund. For example, the managers of this type of
fund will be looking for companies that are growing AND paying dividends.

For examples of some of the top performing index funds check out:
http://www.marketwatch.com/tools/mutualfunds/100index.asp?tf=9&view=37&siteid=mktw
Investing in Mutual Funds or Real Estate
Chapter 14 Notes
Balanced Funds
 A ___________________________________________________________________. ____________________
__________________________________________________________________________________________.
 Balanced funds are generally considered ____________________________________________.
 The goal of the fund is to ______________________________________________________________________.
 For an example of a balanced fund check out:

http://www.marketwatch.com/tools/mutualfunds/overview.asp?siteid=mktw&symb=VWELX&sid=5376
Index Funds
 An ________________________________________________________________________________________
________________. Many of these funds are tied to a specific market average such as the Standard and Poor’s
Index of 500 large company stocks.
 The goal of these funds is to mirror the movements of certain markets, going up as they go up.
 These funds are considered moderately risky. For an example of this type of fund check out:
http://www.marketwatch.com/tools/mutualfunds/100index.asp?tf=9&view=36&siteid=mktw
Money Market Funds
 ___________________________________________________________________________________________
_________________________. These short-term maturities provided current income and maximum safety.
 ___________________________________________________________________________________________.
 For some of the top money market funds check out: http://www.ibcdata.com/index.html
Reading a Mutual Fund Quote
 Some of the basics:
 _______________ – stands for Net Asset Value. It refers to the dollar value of one share of the fund.
 _______________ – stand for Year to Date Return. This tells you how much the fund has made or lost
that year (listed as a percentage).
 ______________. – This tells you the objective of the fund. (Is it a growth, balanced, income etc…)
Real Estate Investment
 Real estate is considered one of the safest investments out there! Why?
 __________________________________________________________________________________.
Simply put, over time property values have risen at a greater rate than inflation.
 In a ______________________________________________________________________________________
_____________________________________. In an ______________________________________________
investors appoint a trustee to hold legal title to the property on behalf of all the investors in the group.
Property Ownership
 When buying real estate, most people make a ____________________________ and get a loan secured by a
______________________________________ to pay the balance.
 You borrow money to make the purchase and you pay the money back, month by month over time.
 Your mortgage stays fixed but the value of the house goes up over time!
 For example, if you buy a $200,000 house and make a down payment of $40,000 (__________________
_________________), you have to borrow $160,000 from the bank.
 After a five years let’s say the house is now worth $250,000 and you decide to sell it. You could pay off
the $160,000 you owed on your mortgage and have $90,000 left.
 That extra money is called equity! _________________________________________________________
____________________________________________________________________________________.
Pros and Cons
 Real-estate investment _______________________________________________________________________.
 Real-estate investment _______________________________________________________________________.
 However, real-estate is one of __________________________________________________________________.
Depending on the market, it can take months or even years to sell!