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Financial Investments

Page history last edited by Robert W. Maloy 5 months, 2 weeks ago


 Financial Investments


Bull and Bear Statute, Frankfurt Stock Exchange, Germany


Topics on the Page

Investing for Beginners: What Does It Mean to Invest

  • 401Ks
  • IRAs 
  • Stocks
  • Bonds
  • Real Estate
  • The G.I. Bill










Investing for beginners: What does it mean to invest?


It means allocating existing resources (usually money) with the expectation of generating profit. 


Here are some examples of different types of investments

  • Investing in real estate. You buy a house at a cost of $200,000 put $50,000 of renovations into the home so that the total investment is $250,000. Then you sell the house for $325,000 for a profit of $75,000. 


  • Investing in businesses. Give a struggling business money in exchange for a stake in their company. If company turns successful now you have some of their future profits. 


  • Investing in a college education. Spend $30,000 x 4 years for a total investment of $120,000. The investment was your time and your money. Get a job that only hires college graduates at a salary of $75,000 per year with bonus potential and work at that company for many years. The investment was worth it for you




 Here is a video discussing how Financial Investment works.


Looking into more complicated investments


1.     A 401K

A 401k is a company sponsored retirement plan. Employees can have a portion taken out of their paycheck through automatic payroll withholding and the company they work for can match some or all of that percentage. In the present times pensions from employers have become increasingly rare as companies have shifted the responsibility and risk of saving to the employees. 



2.     Open an investment account

Investment account such as a Traditional IRA or a Roth IRA can be a great way to retire a millionaire. A Roth IRA is a tax-advantaged retirement savings account that allows a person to withdraw your savings tax-free. A Traditional IRA is different because of how the account it taxed. This chart details the difference.


Roth IRAs are better for people who think that their taxes will be higher in retirement than they are now. Traditional IRAs allow people to contribute pre-tax money to their retirement account where the investments will grow without taxes taken out until they are withdrawn. When they are withdrawn is when they are taxed. There is a limit to contribution in a Roth IRA of either $139,000 for singles or $206,000 for couples. In 2020 the limit per year was $6,000 so $500 per month. A Roth IRA can be established at any point but note that not all financial institutions are equal. Each has a different set of rules and regulations that can have an impact on your savings so be careful when choosing.















3.     Stocks

A stock is a share in a particular company or organization. Owning stock in a company does not mean you own part of the company you simply own part of the shares of that company. As a stock holder in a company you can vote in the shareholder meetings and you can collect dividends (part of the company’s profits). You can also sell your shares if the company value rises or falls and the more shares you have in a company the more voting power you have. As a voter you can help appoint a company's board of directors which can alter the trajectory of a particular company.



4.     Bonds

A bond is a loan issued by the government or a corporation when they want to raise money. When you buy a bond you are issuing a loan to the company you bought it from. Unlike a stock, there is no say in the company's business when you buy a bind it is simply a monetary transaction. The benefits of a bond for the buyer is that the loans acquire interest payments overtime (usually about twice a year) so while you pay a certain amount at first you actually receive more back from the company. Once A bond "reaches maturity" it is completely paid off by the company it was issued to.




5.     Real Estate 

Real estate is considered a financial investment property because it can generate income and appreciate in value over time. Investors purchase real estate with the expectation of earning a return on their investment through rental income or through the appreciation of the property's value.

The value of real estate can rise or fall over time due to various factors, including changes in supply and demand, economic conditions, interest rates, and government policies. For example, if there is high demand for real estate in a particular area and limited supply, the value of properties in that area may increase. On the other hand, if there is an oversupply of properties and low demand, the value of properties may decrease.


Real estate can also appreciate in value over time due to inflation. As the cost of goods and services increases, the value of real estate can increase as well. Additionally, improvements made to the property, such as renovations or upgrades, can also increase its value.

Investors can track the gains or losses in the value of real estate as a financial investment over time by monitoring the property's market value. This can be done through appraisals, comparative market analyses, or by tracking the sale prices of similar properties in the area. Real estate investors can also track their returns through rental income, which is typically reported on a monthly or annual basis. Overall, real estate can be a profitable financial investment property for those who are willing to do their research, manage their properties effectively, and stay informed about market trends and conditions.





The 2008 financial crisis was caused by the subprime mortgage crisis, resulting in widespread defaults, foreclosures, and a sharp decline in real estate values, which had a significant impact on the real estate market and real estate investment.


How to begin investing from Investopedia 



Women on Wall Street 


23.8% of investment bankers are women From  https://www.zippia.com/investment-banker-jobs/demographics/


One of the outstanding women representatives on Wall Street.



The G.I. Bill, the U.S. government's investments in its veterans


What is the G.I. Bill?

1944 - Staff Sergeant Herbert Ellison explaining the G.I. Bill to fellow soldiers of 15th Air Force Service Command in Italy.

Source: Library of Congress. 

The G.I. Bill was signed into effect in 1944 by President Franklin D. Rosevelt. It was the promised benefits for the veterans for being drafted or voluntarily joining the military.


Either while still being in the military or after being released the soldiers and veterans could use this G.I. Bill which guaranteed education, home loans, hospitalization needs, and other things.


The goal was to assist those returning from war to assimilate back into society and get the financial assistance they earned while serving overseas. 


The G.I Bill is still in effect today. Soldiers and officers active duty and national guard/reserves, active or veteran status, can use their G.I. Bill for great benefits like 0% interest on home loans or tuition and fees coverage for college. As a serviceman you invest your time and service into the U.S. government and receive benefits from the occupation.



Just like many other laws and programs in the first half of the 20th century, all African Americans were excluded from this act despite there being no mention of exclusion in the original act. Over 1 million African Americans who served in the in Second World War were denied any benefits for their service, as they were seen unfit to help assimilate into society. African American servicemen fully expect they would have been included, but were painfully disappointment when they arrived home. 


African American veterans now have access to  minority veterans programs




 How would you invest a windfall from winning the lottery of $10,000, $100,000, or $1,000,000?(Question and feedback by Yu Ye, May 2023)


1.Stocks: When investing in stocks, the amount of money you have to invest can determine the number of stocks you can buy. For example, if you have $10,000 to invest in stocks, you might choose to invest in a few individual stocks or a low-cost index fund. With $100,000, you can diversify your portfolio further by investing in a mix of individual stocks and exchange-traded funds (ETFs). And with $1,000,000, you can create a well-diversified portfolio that includes individual stocks, ETFs, and even actively managed mutual funds.


2.Bonds: Bonds are typically considered a more conservative investment than stocks, and they can be a good option for investors who want to earn income and preserve capital. With $10,000, you might consider investing in a bond fund or buying a few individual bonds. With $100,000, you can diversify your bond portfolio further by investing in a mix of corporate bonds, government bonds, and municipal bonds. And with $1,000,000, you can create a well-diversified portfolio that includes bonds with different maturities, credit ratings, and issuers.


3.Mutual Funds: Mutual funds can be a good option for investors who want to gain exposure to a diversified portfolio of stocks or bonds with a relatively small investment. With $10,000, you can invest in a few mutual funds that provide exposure to different asset classes, such as large-cap stocks, small-cap stocks, and international stocks. With $100,000, you can create a well-diversified portfolio that includes a mix of mutual funds that provide exposure to stocks, bonds, and other asset classes. And with $1,000,000, you can create a portfolio of actively managed mutual funds that are focused on specific sectors or investment strategies, such as growth, value, or income.


4.Real Estate: Real estate is a tangible asset that can provide both rental income and capital appreciation over time. With $10,000, you might consider investing in a real estate investment trust (REIT) or buying a small rental property. With $100,000, you can invest in a larger rental property or a few properties in different locations. And with $1,000,000, you can create a well-diversified real estate portfolio that includes a mix of rental properties, REITs, and other real estate investments, such as crowdfunding platforms or private equity funds.



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