InvestingforDummies-WhitmanCollege.pptVIP

A quick introduction to investing by CEO Sarah Deming September 8, 2009 Why do the rich stay rich? Why can people retire before being eligible for social security? In the long-run, the Dow (DJIA) has significantly out performed the risk-free investment (the t-bill) Equities/Common Stock Core vs. Growth Fixed Income Definition Different Ways to Invest Alternative Investments Options, Real Estate, Hedge Funds, ect. The WIC portfolio is made up largely of Core (60%) and Growth (25%) Equities “Big and boring is the key to core investments” Stable, large, blue-chip companies Large Market Capitalization (10 Billion) Consistent, large ROE (return on equity) Steady Rate of Growth Dividends Examples in our portfolio: Boeing, General Electric, Proctor Gamble “Glamour Stock” Shares in a company whose earnings are expected to grow at an above-average rate relative to the market More risky, greater chance of a higher return Commonly Technology Companies No Dividends Examples: Hansen, Amgen, Applied Materials, Nintendo Dow Jones Industrial Average “When the market is up today” Price-weighted average of 30 large, significant stocks Most watched index Standard Poor’s 500 Leading indicator of U.S. equities Reflects the risk/return characteristics of the large cap universe A type of investment that yields a regular (fixed) return—primarily, bonds. Bonds are debt (stocks are equity) Bonds are used to diversify portfolios Issuers of bonds are generally corporations and governments Government bonds are the safest investments and are used as “risk-free” instruments Bond funds is a common way to invest in fixed income. Bond funds are primarily invested in a variety of bonds and other debt instruments with a specific focus. Examples of bond funds WIC holds are Vanguard Total Market Fund and PIMCO Low Duration. Corporate Bonds Municipal Bonds (tax advantages) U.S. Treasury Bills Often require large amount of investment Risky but have a high return Limited Regulations, complex, low