Where to Buy Stocks and Bonds

Where to Buy Stocks and Bonds

Major Markets NYSE – New York Stock Exchange AMEX – American Stock Exchange NASDAQ – DOW or DJIA – Dow Jones Industrial Average top 30 companies in America S&P 500 – top 500 companies in America

Full Service Brokerage Firms Give investment advice Offer a wide variety of financial products and services Charge higher commissions

Discount Brokerage Firms Do not give investment advice Offer a limited number of finanacial products and services

Buying online Buyers pay lower commissions Buyers can more easily compare brokerage services

Dividend ReInvestment Plans DRIPS Many large companies offer DRIPS Stockholders are paid dividends in the form of stock No commission fee is charged

What to look for in a Mutual Fund? Look at paper 7-3 Charge lower commissions

What is a mutual fund? Pool of money from investors used to purchase numerous stocks

Who is in charge? Choose a company which has numerous funds. A fund manager then takes your money and invests in a particular fund of your choosing

What is the risk? Savings account CD – Certificate of Deposit money-market funds bonds funds mutual funds – Income funds (high-yield stocks and bonds) – Growth funds (larger company stocks) – Aggressive growth funds (smaller company stocks) stock funds Real Estate

How to pick a mutual fund? (new subject)

Performance most important risk willing to take fund manager

Fees load - sales commission – front-end – pay up front – back -end – pay when you sell – they will help you decide what to do management fees 12b-1 used to advertise the fund to the public

Convenience buy small amounts? statements easy to read fund families have different goals you could invest in knowledgeable, helpful

So why a mutual fund? Professional Management Diversification Liquidity Investment objective

Order of risk and reward of investments: Order of risk and reward of investments: Savings account – small steady return · · CDs Certificate of Deposit – safe, but instant access has a penalty · Bonds – lend money to a corporation or government; higher return than above · Mutual Funds – o Income funds (high-yield stocks and bonds) – o Growth funds (larger company stocks) – o Aggressive growth funds (smaller company stocks) · Stock Market Real Estate – risks and benefits of being a landlord

Types of Mutual Funds Money market – short term Bond funds – long term bonds (corp & gov) Income funds – high yield stocks and bonds Growth Funds – large companies; long term Aggressive growth- smaller companies