Investing Options (separate from your glossary, please) Investment Description Risk Buying Stocks Buy a portion (shares) of the Very company. If the share price high increases, you make money. Broker Fee: It costs you to buy a share. Usually $30.00/trade or a % of how much you buy G.I.C. Guaranteed Investment Certificate No Purchased from a bank for a set Risk time period, at a set interest rate. No way to lose your money. Interest rate is usually very low Savings Bonds Similar to a G.I.C., but you Very purchase bonds from a little government or a major corporation risk When you buy a bond, you are (rates actually buying „debt‟—you are can change) loaning the government money. Purchased through a bank for a set time period, at a set interest rate. Bonds no longer work with a paper certificate—its electronic Mutual Funds Buying a group of similar stocks, Med- but a financial company (bank) High buys and manages them for you. Risk Advantage: you don‟t have to do (you any work. Disadvantage: they can lose charge a 2-3% fee. $) R.S.P‟s Retirement Savings Plans. A tax- Varies on what sheltered way of investing. You pay tax you on the interest when you pull the money invest in out in retirement. You can invest in a GIC, mutual fund, etc., but it‟s under the R.S.P. tax-deferred umbrella. You can use your RSP money to buy your first house, but you have to pay it back within 15 years. Treasury-bills Short-term government obligations Low (T-bills) (debts-loan gov. money), generally Risk issued with various maturities of up to one year. Like a bond, but for a short time period. Money guaranteed, but interest rates vary. Money Market A glorified bank account, but you Low usually have to give 24-48 hours notice Risk to withdraw your money. Interest rates are higher than a standard savings account. Interest rate fluctuates. Investment Usually linked with on-line banks (like Low Savings ING direct). A higher interest savings Risk Account (ISA) account, but you can often withdraw money using bank card or internet. ISA’s must be linked with an ‘external checking account’, like Royal Bank. Property (Land, Fixed assets (physical items that Usually, very low Houses) increase in value) are often a good risk investment. Ex 1: A house bought in (especiall Etobicoke in 1960 cost $40 000. It‟s y land) now worth $600 000. Ex 2: A house High bought in Calgary in 1985 worth risk if $200 000 was worth $100 000 in 1995. buying & selling Usually, land & house values slowly in a year increase, steadily, over time. Own a business Rather than putting your cash into a Very financial investment, you put that high money into the start-up costs for a small risk, especial business. As the business makes ly if no money, you earn back your original business investment, and hopefully more. plan However, 1 in 5 small businesses fail in the first year. You could lose all your $ Buy a franchise You buy the rights to own a store that is Med part of a larger corporation. Advantage: risk, if You have the name, idea, marketing. you can afford Disadvantage: 1) Huge costs—1/2 a the million for Tim Hortons for everything start-up 2) You cannot customize your business fees Gambling/ Your chances of winning the grand Waste Lottery prize in any Ontario-based lottery are of less than being struck by lightening money twice. This is not an investment. “Lotteries are a burden and a tax on the poor…” Commodities You buy physical, raw-products. For an average Examples include livestock, lumber, investor, metal, oil/natural gas, pork bellies, corn, EXTRE wheat, etc. These commodities trade on MELY high risk. an open market, where the price fluctuates. Your goal is to buy a large quantity at a low price, and sell it at a higher price. You have to be able to store and transport the commodity. Gold Is a special commodity. It‟s value per Safe, because ounce is worth more than most the price commodities. Gold prices tend to changes changes exactly OPPOSITE the stock slowly markets. If the market is down, gold price go up. Gold is considered the default investment when markets are in trouble. Currency You buy and sell other countries‟ Safe, because money. If their currency increases at a the price faster rate than your currency, then you changes make money. International investors slowly are less interested in Canadian currency, because it‟s almost the same value as the US currency. It‟s no longer a deal.
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