Investing in Mutual Funds or Real Estate Chapter

Investing in Mutual Funds or Real Estate Chapter 14 Notes Mutual Funds o This is the most popular investment alternative out there! Here are the basics: n ___________________________________________ __ _________________________________________. n The investment company that manages the fund _______________________. They charge a _______________ for their services. n Professional fund managers buy and sell based on the ___________________ and _______________________. Why Investors Purchase Mutual Funds o ____________________! n 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. o ____________________! n When you invest in funds, you are diversifying because mutual funds purchase numerous and diverse stock and bond issues. o ____________________! n You can turn your money into cash whenever you need it (unless, of course, the fund is part of some type of retirement account). o ____________________! n 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 o Individual funds have different investment goals and strategies. You should choose funds that have goals and strategies that match your own. o There are many different types of funds to choose from including: Growth, income, balanced, bond, global and index funds. n Growth Funds o A ______________________________________. They are considered more risky but can really hit big. o An ______________________________________. These are even more risky but can lead to massive returns if they hit. o Examples of some of the top growth funds can be seen at: http: //www. marketwatch. com/tools/mutualfunds/100 index. asp? tf=9&view=2&siteid=mktw o http: //www. marketwatch. com/tools/mutualfunds/overview. asp? siteid=mktw&symb=FMILX&sid= 9964 Income Funds o An ________________________________________________________________________________________. o The goal of these types of funds is current dividend income. ____________________. o 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. o For examples of some of the top performing index funds check out: http: //www. marketwatch. com/tools/mutualfunds/100 index. asp? tf=9&view=37&siteid=mktw

Investing in Mutual Funds or Real Estate Chapter 14 Notes Balanced Funds o A _______________________________________________________. o Balanced funds are generally considered ______________________. o The goal of the fund is to ___________________________________. o For an example of a balanced fund check out: n http: //www. marketwatch. com/tools/mutualfunds/overview. asp? siteid=mktw&symb=VWELX&sid=5376 Index Funds o 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. o The goal of these funds is to mirror the movements of certain markets, going up as they go up. o These funds are considered moderately risky. For an example of this type of fund check out: http: //www. marketwatch. com/tools/mutualfunds/100 index. asp? tf=9&view=36&siteid=mktw Money Market Funds o ______________________________________________. These short-term maturities provided current income and maximum safety. o ______________________________________________. o For some of the top money market funds check out: http: //www. ibcdata. com/index. html Reading a Mutual Fund Quote o Some of the basics: n ________ – stands for Net Asset Value. It refers to the dollar value of one share of the fund. n ________ – stand for Year to Date Return. This tells you how much the fund has made or lost that year (listed as a percentage). n _______. – This tells you the objective of the fund. (Is it a growth, balanced, income etc…) Real Estate Investment o Real estate is considered one of the safest investments out there! Why? n _________________________________________. Simply put, over time property values have risen at a greater rate than inflation. o 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 o When buying real estate, most people make a ______________ and get a loan secured by a ___________________ to pay the balance. n You borrow money to make the purchase and you pay the money back, month by month over time. n Your mortgage stays fixed but the value of the house goes up over time! n 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. n 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. n That extra money is called equity! _______________________________________________________________________. Pros and Cons o Real-estate investment _______________________________________________________________________. o However, real-estate is one of _________________________________. Depending on the market, it can take months or even years to sell!