How to INVEST
Investing: giving money to someone else (e.g. a financial
institution) with the expectation you will get a return; what the
return is will depend on what you invest in.
Get information and advice before you invest your money.
Worksheet 4
1. What does investing mean to you?
2. How can you learn more about investing money?
3. Why is it important to start investing money when you
are young?
4. What does a Financial Advisor do?
5. Would you rather receive $10,000 now – or – a penny a day,
doubled everyday for a month (31 days)?
There are 3 characteristics that apply to all investments:
Expected return: interest, dividends, or capital gains you
expect to receive from your investment
Risk: the possibility of losing some, all, or more than the
amount you invested, or the possibility of earning a lower rate of
return than expected
Liquidity: how easy – and/or quick – it is to sell or redeem
the investment
Types
Advantages Disadvantages
of Investments
• Safe; insured by
government (to a limit)
Savings Account • Returns are usually low
• Pays interest
• Running Record
GICs • Safe • Keep money in deposit
(Guaranteed Investment • Higher interest than until it matures
Certificate) Savings Account • Returns are relatively low
• The market value can
• Usually fixed interest rate
drop due to interest rate
Bonds to the buyer at set
increases or an issuer’s
intervals
bad credit rating
• Generally safer than
• Depending on type of
corporate stocks
Mutual Fund, market
Mutual Funds • Allows diversification
value may decline
• Allows investing smaller
sharply
amounts
• Stock value may decline
• Unlimited potential on the sharply
Stocks
return on investment • Risk is greater than for
Mutual Funds