What are the various forms

of investment?

Lesson 1 Week 1

Accounting

YEAR 10

Dec 2014

AusVELS

• Explain the role and significance of savings and investment for individuals and for the economy, and demonstrate the skills required to successfully plan and manage personal finances.

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GKR

Study Handout 1. What do you think today’s lesson is about?

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Today’s Learning Intention:

To develop an awareness of various investment types.

Success Criteria:

Able to identify the investment forms

Able to provide one example of an investment for each investment form

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Key Vocabulary:

• Investment

• Profit

• Convert

• Equivalent

• Money Market

• Real estate

• Stocks

• Shares

• Bonds

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Activity – Handout 2

• Create your own definitions

– Look at each of the sentences in Handout 2. Study how each word (in bold) from the vocabulary list is used.

– Now create your own definitions for each of these words.

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3 Forms of Investment

1. Ownership

– Putting money into something that gives you ownership or part ownership of that ‘thing’.

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3 Forms of Investment

2. Lending

– You act like a bank

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3 Forms of Investment3. Cash equivalents

– As good as cash because they can be easily turned converted into cash

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Activity – Handout 3

• Complete handout 3 by:

– watching the rest of this presentation to understand each of the investment types named

– then identifying the form each of the investment types are by recording them in the correct column on the handout

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Types of Investment

Note the following is in no way to beconsidered investment advice. It is foreducational purposes only!

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Types of Investments

• Remember, we invest to make money

• How can we compare investments?

• We can look at Return on Investment – that is, how much we make based on how much we have put in

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Types of Investments

• Savings accounts allow you to keep your money in a safe place, a bank.

• By putting your money into a savings account you are lending the bank your money.

• You earn interest on themoney you put into yoursavings account.

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Click on the image to find out - How Banks Work!

Types of Investments

• Go to http://www.anz.com.au/personal/bank-accounts/calculators-tools/

• Use the savings calculator to work out how much interest you can earn in 1 year on $100,000

• Calculate the rate of return as:

ROI = (Gains – Cost)/Cost

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Types of Investments

• Business ownership

• Benefits – being own boss,possibly making more moneythan could as employee

• Risk – bankruptcy, very longhours, etc.

Click on image

If it costs $100,000 to invest in the business and ROI is 25% how much will you have earned on your investment?Dec 2014 Wk1-L1 15

Types of Investment

• Real Estate – owning real estate has many benefits but there are risks too such as:– tenancy risks (can’t get any / property damage)

– liquidity (can’t get money quickly)

– unable to make repayments on property

35 Reasons To Invest In Real Estate

http://www.yourinvestmentpropertymag.com.au/buying-property/35-reasons-to-invest-in-real-

estat

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Types of Investment

• Precious objects ownership – such as gold, art, classic cars, glass, jewellery, etc., etc.

• Benefits include the pleasure of ownership and an capital growth.

• There are risks such as capital loss,damage and theft.

• Usually takes a long time for capital growth to occur and generally does not generate any income until sold.

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Types of Investments

• A Money Market Fund is an investment that is easily converted to cash

• The security the fund invests in must be < 3 months to maturity so there is little risk of change in its value if interest rates change

• It is a place to store cash that pays a higher rate of interest than a savings account but is still relatively stable (safe)

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Types of Investments

Click on image

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A bond owner has lent money

Bonds – are fixed income investment

Types of Investments

• An investment is something into which we put our money with the intention of making a profit.

• Are modern cars, education and big screen TVs something we will make a profit from?

Complete the table.

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Handout 3 - Solution

Ownership LendingCash

Equivalent

Not an

Investment

StocksSavings

Account

Money Market Funds

Education

Business Bonds -Big Screen

TVs

Real Estate - - Cars

Precious Objects

- - -

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Review:

1. List the 3 investment forms.

2. Give one example of an investment option for each investment form.

3. List 1 learning strategy you used in today’s lesson.

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