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CHAPTER 6: INVESTMENT PLANNING - Coggle Diagram
CHAPTER 6: INVESTMENT PLANNING
1.INVESTMENT GOALS
Specific & measurable
Purpose, amount, time needed
Risk tolerance
2. PREPARING TO INVEST
Financial checkup
(budget, debt, emergency fund)
Sources of money
(savings, payroll deduction, windfalls)
Time Value of Money
(small sums grow over time)
3. FACTORS AFFECTING INVESTMENT
Safety vs. Risk
Risk-Return Trade-Off (higher risk = higher potential return)
Risk components
Inflation risk
Interest rate risk
Business failure risk
Market risk
Global risk
4. INVESTMENT DECISIONS
Income investments
: bonds, deposits, rental property
Growth investments
: stocks, mutual funds, real estate
Liquidity
: ease of buying/selling (stocks high, real estate low)
5.ASSET ALLOCATION
Spread investments to reduce risk
Depends on age & time horizon
Investment Pyramid (low → high risk)
6. INVESTMENT ALTERNATIVE
Stocks / Equities
Bonds (corporate & government)
Mutual Funds
Real Estate & REITs
Unit Trusts
Gold & Commodities
7. MY ROLE IN INVESTING
Monitor and evaluate investments
Use reliable financial information (internet, reports, newspapers)
Keep accurate records
Consider tax consequences