Financial literacy is the foundation

of sound financial decision making.

Investments come in a wide variety of forms, each with its own characteristics, risks, and potential returns.

(Note: listed investments may or not be offered and are provided for educational purposes and are not considered recommendations.)

Types of Investments:

1. Stocks (Equities)

  • Common Stocks: Shares that represent ownership in a company, giving shareholders voting rights and a share in profits through dividends.
  • Preferred Stocks: Shares that provide a fixed dividend but usually don’t come with voting rights.

2. Bonds (Fixed Income)

  • Government Bonds: Issued by governments; considered low-risk.
  • Corporate Bonds: Issued by companies; higher risk than government bonds.
  • Municipal Bonds: Issued by local governments; often tax-exempt.
  • Treasury Bonds: Long-term bonds issued by the U.S. government.
  • Junk Bonds: High-yield, high-risk bonds from companies with lower credit ratings.

3. Mutual Funds

  • Equity Funds: Invest in stocks.
  • Bond Funds: Invest in bonds.
  • Index Funds: Track specific market indexes.
  • Balanced Funds: Invest in a mix of stocks and bonds.

4. Exchange-Traded Funds (ETFs)

  • Stock ETFs: Track a stock index.
  • Bond ETFs: Track a bond index.
  • Sector ETFs: Focus on specific sectors like technology or healthcare.

5. Real Estate

  • Direct Real Estate Investment: Buying physical properties.
  • Real Estate Investment Trusts (REITs): Companies that own and operate income-producing real estate.

6. Commodities

  • Precious Metals: Gold, silver, platinum.
  • Energy: Oil, natural gas.
  • Agricultural Products: Wheat, corn, soybeans.

7. Derivatives

  • Options: Contracts that give the right, but not the obligation, to buy or sell an asset at a set price.
  • Futures: Contracts to buy or sell an asset at a future date for a predetermined price.
  • Swaps: Contracts to exchange cash flows or other financial instruments

8. Cryptocurrencies

  • Bitcoin: The first and most widely known cryptocurrency.
  • Ethereum: A cryptocurrency with smart contract functionality.
  • Altcoins: Other cryptocurrencies like Ripple, Litecoin, and Cardano.

9. Certificates of Deposit (CDs)

  • Short-term CDs: Typically mature in less than a year.
  • Long-term CDs: Maturities can range from one year to several years.

10. Savings Accounts

  • High-Yield Savings Accounts: Offer higher interest rates than traditional savings accounts.

11. Annuities

  • Fixed Annuities: Provide regular, guaranteed payments.
  • Variable Annuities: Payments depend on the performance of investment options chosen by the holder.

12. Collectibles and Alternative Investments

  • Art: Paintings, sculptures.
  • Antiques: Furniture, historical artifacts.
  • Wine: Investment-grade wines.
  • Other Collectibles: Coins, stamps, sports memorabilia.

13. Private Equity and Venture Capital

  • Private Equity: Investing in private companies.
  • Venture Capital: Investing in early-stage, high-potential companies.

14. Hedge Funds

  • Market-Neutral Funds: Aim to offset market risk by taking long and short positions.
  • Event-Driven Funds: Invest based on corporate events like mergers and acquisitions.

15. Money Market Instruments

  • Treasury Bills (T-Bills): Short-term government securities.
  • Commercial Paper: Short-term unsecured promissory notes issued by corporations.
  • Certificates of Deposit (CDs): Short-term CDs issued by banks.

Each type of investment has its own set of characteristics and is suitable for different investor needs and risk tolerance levels. Diversifying across multiple types can help manage risk and improve the potential for returns, but it is important to understand the risk factors of each investment before entering any investment.

Financial Literacy encompasses the knowledge and skills

necessary to manage money effectively,

including budgeting, saving, investing, and understanding risks.

Major Investments Risk Spectrum

The higher the risk, the higher chance for potential gains, but so is the risk of loss!

Finding the right solution or balance can be challenging, so make sure that you increase your knowledge through financial education & find a trusted advisor to get the proper guidance and education.

By improving your financial literacy, you can better navigate the

complexities of personal finance, avoid common pitfalls,

and work towards achieving your financial goals.

Compound Interest is the 8th Wonder of the World

Those who understand it, EARN IT, Those who don’t, PAY IT !!

- Albert Einstein

In the Rule of 72 we can see how long it will take to double our investments, depending on the interest rate.

Now let’s see if you get the concept.

If you were given the choice of:

1.) One million dollars in silver

or

2.) One penny that you would double every day for a month (30 days) and keep all the change after day 30……

Which would you pick??

Here's an illustration of how just one penny grows over the course of 30 days:

Day 1: $0.01
Day 2: $0.02
Day 3: $0.04
Day 4: $0.08
Day 5: $0.16
Day 6: $0.32
Day 7: $0.64
Day 8: $1.28
Day 9: $2.56
Day 10: $5.12
Day 11: $10.24
Day 12: $20.48
Day 13: $40.96
Day 14: $81.92
Day 15: $163.84

Day 16: $327.68
Day 17: $655.36
Day 18: $1,310.72
Day 19: $2,621.44
Day 20: $5,242.88
Day 21: $10,485.76
Day 22: $20,971.52
Day 23: $41,943.04
Day 24: $83,886.08
Day 25: $167,772.16
Day 26: $335,544.32
Day 27: $671,088.64
Day 28: $1,342,177.28
Day 29: $2,684,354.56
Day 30: $5,368,709.12

As you can see, the amount grows exponentially, reaching over $5 million in just 30 days, starting from a single penny. This illustrates the power of compounding and exponential growth in investments.

Now you understand how money compounds. Let’s see if it’s better to start early or to wait and put back twice as much later.

Curley was an early adopter to investing and started putting away $200 a month at age 30,

Nate put off his retirement, but figured he could accelerate his savings by putting away $500 a month at age 50.

By the time they both get to Age 65, who will have more?…

A.) be close to the same

B.) Curley (age 30)

C.) Nate (age 50)

The following graph illustrates the investment growth comparison at the different returned interest rates of 6%, 8%, & 10% .

By the time they both get to Age 65 who has more?…

A.) be close to the same

B.) Curley (age 30)

C.) Nate (age 50)

Curley will come out much better as the rate of return or interest increases.

As we learned in the Rule of 72, the longer time you have, the more time your money has to double/compound.

As we get older, we simply run out of time. So, it’s better to start Early like Curley, Instead of Late like Nate!!

How do you view money? Do you see it as …

GOOD (Money Talks)

Good

BAD (the Root of All Evil)

Evil

Or NEITHER ?

Good

Overall, money is simply an instrument or tool.

It’s not good or evil, but how it is used.

The more favorable you view money, the better you will become with money.

“Get Wisdom.”

“Get Understanding.”

Therefore, it is crucial that we condition ourselves to see money as favorable, rather than terrible.

The last part of this section, we show a few ways to have fun with money.

So, to allow you to start warming up to the idea of money……

Here are just a couple of the catchphrases which mention “money” :

  1. A penny saved is a penny earned.
  2. Money talks.
  3. Time is money.
  4. Cash is king.
  5. Money doesn’t grow on trees.
  6. Money makes the world go round.
  7. Pay the piper.
  8. Money to burn.
  9. Easy come, easy go.
  10. Filthy rich.
  11. Deep pockets.
  12. Worth your weight in gold.
  13. In the black.
  14. In the red.
  15. Breaking the bank.
  16. Living paycheck to paycheck.
  17. Money can’t buy happiness.
  18. For love or money.
  19. Put your money where your mouth is.
  20. Throw money at a problem.

More fun catch phrases with mention of money :

  1. Rolling in dough.
  2. Money changes everything.
  3. Money talks, BS walks.
  4. Making a mint.
  5. Money pit.
  6. Money for old rope.
  7. Money doesn’t buy class.
  8. Money can’t buy time.
  9. Cash on the barrel head.
  10. Money under the table.
  11. A fool and his money are soon parted.
  12. Money is the root of all evil.
  13. Follow the money.
  14. Money is power.
  15. Cash and carry.
  16. Money down the drain.
  17. Put your money to work.
  18. To the penny.
  19. Big bucks
  20. Cash Cow