| The process of investment planning, the basic rule | | | | of shares held, as a percentage of total shares |
| to saving for the rainy day with proper planning, is | | | | issued. Stocks generally give higher returns than |
| researching, finding, and adopting certain effective | | | | bonds or cash equivalents. However, consider the |
| strategies to invest well, in order to create and | | | | risks before investing. Various types include |
| accumulate the kind of resources and wealth that | | | | - aggressive growth stocks |
| you wish to have for later in life. All planned | | | | - American Depository Receipts |
| investing behavior is goal driven, and specifically | | | | - common stocks |
| personal investing is driven generally by two | | | | - growth stocks and more |
| overall goals: | | | | BONDS: are loans, or debt instruments. You loan |
| - Creating financial resources and wealth | | | | money to a corporation or to the government, |
| - Conserving financial resources and wealth | | | | and they pay you regular interest over time. |
| - Or a combination of the two | | | | Bonds can augment current income while keeping |
| Sadly, not a lot of people have a clear | | | | your principal safe and diversifying your |
| understanding of their goals and go about | | | | investment portfolio. A wide range is available, |
| investing haphazardly, without any kind of a plan. | | | | including |
| In order to make sure that you are saving for | | | | - agency bonds |
| the rainy day with proper planning, research the | | | | - asset-backed bonds |
| options available and consider the services of | | | | - bearer bonds |
| qualified CPAs. Think of planning as a step by step | | | | - callable bonds |
| process that has many elements. | | | | - municipal bonds |
| - Set investment goals | | | | - zero-coupon bonds etc |
| - Understand your personality with regard to | | | | REAL ESTATE: this type of investment includes |
| investing | | | | direct and indirect investment in buildings or land |
| - Design the right investment portfolio | | | | and generally has a higher potential for gains, as |
| - Evaluate various market and investment options | | | | capital gains, tax credits, and rental income. |
| - Select specific investments that are suitable for | | | | Options available include |
| you | | | | - Real Estate Investment Trusts |
| - Manage and monitor your portfolio regularly | | | | - real estate partnerships |
| - Rebalance and redesign your portfolio as and | | | | - rental property etc |
| when it is needed | | | | MUTUAL FUNDS: an investment company pools |
| The various investment options may include one | | | | money from various investors and invests in |
| or more of the following: | | | | stocks, bonds, or securities. The money is |
| CASH: consists of bank balances, currency, coin, | | | | managed by a professional fund manager. A bond |
| negotiable money orders, and checks of all kinds. | | | | mutual fund produces capital gains, while stock |
| Keep only enough cash to meet your regular living | | | | mutual funds provide capital growth and dividend |
| expenses and hold the rest in cash equivalents. | | | | income. Other types include |
| These are relatively safe, short-term investments | | | | - balanced funds |
| easily and quickly convertible into cash. Various | | | | - equity-income funds |
| types include | | | | - growth and income mutual funds |
| - certificates of deposits | | | | - natural resources funds and so on |
| - checking accounts | | | | INSURANCE-BASED INVESTMENTS: are issued or |
| - commercial paper | | | | underwritten by an insurance company. Consider |
| - GIC | | | | type of products, advantages and disadvantages |
| - money market accounts | | | | and tax consequences of each before investing. |
| - T-Bills and so on | | | | Some of the other instruments for saving for the |
| Cash equivalents are safe and highly liquid but | | | | rainy day with proper planning are |
| each variety has its own strengths and | | | | - hedge funds |
| weaknesses. The degree of risk varies. | | | | - derivatives |
| STOCK: A stock is an equity security. If you hold | | | | - options |
| one or more shares of stock in a company, you | | | | - commodities |
| actually own a small piece of the company. | | | | - futures |
| Stocks are sold to raise money for expansion, | | | | Before investing any sizable amount in any way, |
| debt pay off, and operating capital. The | | | | consult an expert, CFP, attorney or a CPA. |
| percentage of ownership is based on the number | | | | |