ch 14: investing fundamentals

Vanguard ETFs product fact sheets

1. income&growth= REIT ETF (VNQ), Utilities ETF (VPU), High Dividend Yield ETF (VYM), Value ETF (VTV), Dividend Apprec ETF (VIG) 2. sectors: Consumer Discret ETF (VCR), Health Care ETF (VHT), Industrials ETF (VIS), Information Tech ETF (VGT) 3. large cap: S&P 500 ETF (VOO), Large-Cap ETF (VV) 4. small cap: Small-Cap Value ETF (VBR), Small-Cap ETF (VB) 5. midcap: Total Stock Market ETF (VTI) Mid-Cap ETF (VO)

education ira

10% early withdrawal is waived when used for higher education expenses

PKS says, you should contribute

16% of your earnings per month into your retirement accounts!

Preferred stock:

a certificate issued by a firm to raise funds that entitles share-holders to first priority to receive dividends Less risky than common stock

Common stock

a certificate issued by a firm to raise funds that represents partial ownership in the firm

Socially Responsible Investing

an investment strategy where an investor achieves both financial gain and social good by investing in companies that have a positive impact on society

Before you start to invest, you should

ensure liquidity in your emergency funds by owning money market mutual funds.

Professor Kevin Suber says you should include a percentage of

growth investments as part of your portfolio. This can be calculated by subtracting your age from 120-140.

Growth stocks tend to pay lower dividends and have

higher appreciation of stock prices

Income stocks tend to pay higher dividends and have

lower appreciation of stock prices.

why should you own life insurance as a college student

pay for counseling spouse has no income pay funeral school aged children disabled parent people rely on your support

simplified employee pension ira

pay yourself first pretax contributions

Stockholders

referred to as shareholders, are the owners of the company.

financial system

system that allows the transfer of money between savers and borrowers

regular ira

tax deferred interest and earnings annual limit on individual contributions limited eligibility for tax deductible contributions contributions do not reduce current taxes

roth ira

tax deferred interest and earnings annual limit on individual contributions withdrawals are tax free in specific cases contributions do not reduce current taxes

The risk-return relationship means the higher the risk,

the higher the return

purpose of financial markets

to bring the buyers who want MONEIS together with the sellers who have the MONEY.

Smart Investors have CASH

to invest for a greater return.

The Firm issues securities

to raise CASH in the Primary Market

rollover ira

traditional IRA that accepts rollovers of all portion of your taxable distribution from a retirement plan you can rollover to Roth ira

PKS says you can use your Roth IRA as an emergency account

which allows you to withdraw money from the retirement account tax-free and penalty-free after five years!

ROTH IRA if you are under 50 years old!

$5500 is the maximum amount per year that you can deposit into a

Stock prices

* are influenced by supply and demand. * are regulated by the SEC * have no set limit. $$$ * generally increase with good financial news. * never can go down if you own the index 500 for over 15 years.

PKS says your monthly plan for retirement savings should be

1. Match the money that your company contributes to a 401(k) or 403(b). 2. Max your ROTH IRA and Contribute approximately $458 to a Roth Ira, if you are under 50 years old. 3. Contribute the balance of the monthly percentage (16% - Matching and Roth) goal to your 401(k) or 403(b).

seven reason you can withdrawal from an IRA or 401k with no penalties?

1. Normal - Begin after age 59½ 2. Early Retirement Exception - Begin retirement at any age, but you must make a 5 year withdrawal filling Tax form 5329 of the IRS section 414(w)(1)(B) 3. Unreimbursed Medical Expenses 4. Required Minimum Distributions at age 70 ½ 5. Death - If you die, your beneficiaries are able to take distributions without penalty 6. Disability- 7. . IRS Levy - when the IRS levies an account for unpaid taxes and/or penalties, this distribution is generally not subject to penalty 8. Fixed Amortization method 9. Education 10. divorce 11. ROLLOVERS & Roth IRA or Roth 401k Conversion

Fidelity and iShares® ETFs products to BUY portfolio

1. Real estate (FREL) and utilities (FUTY) stock 2. Sectors: Consumer Discretionary (FDIS), Healthcare (FHLC), industrials (FIDU), info tech (FTEC) 3. large company stock: Core S&P 500 ETF (IVV) and Core S&P Total US Stock Mkt ETF (ITOT) 4. small cap stock= Core S&P Small-Cap ETF (IJR), S&P Small-Cap 600 Growth ETF (IJT), S&P Small-Cap 600 Value ETF (IJS) 5. mid cap= S&P Mid-Cap 400 Value ETF (IJJ) S&P Mid-Cap 400 Growth ETF (IJK) Core S&P Mid-Cap ETF (IJH)

CHARLES SCHWAB ETFs

INCOME & GROWTH ETF's 20%: -Schwab US REIT ETF (SCHH) -Schwab US Dividend Equity ETF (SCHD) Sectors to invest 10%: --Schwab International Small-Cap Eq ETF (SCHC) --Schwab International Equity ETF (SCHF) --Schwab US TIPS ETF (SCHP) Large-Cap 25%: --Schwab US Large-Cap Growth ETF (SCHG) --Schwab US Large-Cap Value ETF (SCHV) --Schwab US Large-Cap ETF (SCHX) Small-Cap ETF's 20%: --Schwab US Small-Cap ETF (SCHA) Total/Mid-Cap Market 25%: --SCHWAB U.S. BROAD MARKET EFT --Schwab US Mid-Cap ETF (SCHM)

PK says that if your income is $30,000 your Minimum emergency fund should

Monthly expenses × 3 months Example: $2,000 × 3 = $6,000

The Corporation and Financial Markets

The primary advantages of the corporate form of organization are that ownership can be transferred more quickly and easily than with other forms and that money can be raised more readily.

stakeholder

anyone with a claim on the assets of the firm, including, but not limited to, shareholders. Stakeholders include the firm's employees, suppliers, creditors, and the government.

spousal ira

both working spouse and nonworking spouse can contribute up to the annual limit