Investing Unit 2 Investing Basics - Financial Security for All

Introduction
Unit 1: Basic Building Blocks of Successful Financial Management
Unit 2: Investing Basics

Saving and Investing
Risk
Diversification
Dollar-Cost Averaging
Time-Value of Money
Asset Allocation
Investment Preferences
Summary
Action Steps
About the Author

Unit 3: Finding Money to Invest
Unit 4: Ownership Investments
Unit 5: Fixed-Income Investing
Unit 6: Mutual Fund Investing
Unit 7: Tax-Deferred Investments
Unit 8: Investing with $mall Dollar Amount$
Unit 9: Getting Help: Investing Resources
Unit 10: Selecting Your Team of Financial Professionals
Unit 11: Investment Fraud

Study Guide
Action Steps
Monthly Investment Messages
Glossary

Investing Basics

Joan E. Witter, M.S., Michigan State University Extension

In unit 1, you learned about financial building blocks such as cash management. Now it’s time to examine basic investing principles. Wise investing requires knowledge of key financial concepts and an understanding of your personal investment profile and how these work together to impact investing decisions.

This unit will:

Discuss the difference between saving and investing
Illustrate the risk/rate-of-return tradeoff
Explain the importance of the time-value of money and asset allocation
Challenge you to think about your personal risk tolerance
Help you to recognize that your tax bracket, financial goals and time horizon are key factors in defining an appropriate investment plan and asset mix for you and your family.