Investing for now and the future Co-opTrust Investment Services Presentation by Lydia Muchiri 26...
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Transcript of Investing for now and the future Co-opTrust Investment Services Presentation by Lydia Muchiri 26...
Investing for now and the future Co-opTrust Investment Services
Presentation by Lydia Muchiri26 June 2010
Outline
• Saving vs Investing• Key Considerations before starting• Stages of life and investing• Set goals• Diversification• Asset Classes• Choosing an Investment• A case of the NSE• Conclusion
Saving Vs Investing
• A savings to one person may be considered an investment to another.
• Saving - putting aside a sum of capital or cash that remains constant while earning a low, guaranteed rate of interest.
• Investing - putting capital where it can increase or decrease in value, but where neither interest nor dividends are guaranteed.
Key Considerations before starting
• Before you start investing, first establish an emergency kitty – 2 to 6mths of your take home
• Have Insurance – Protect what you already have
• Determine your Stage of life – Where am I?
• Set goals – why do I want to invest ?
• Where to invest?
Stages of life and investing
Age Saving Capacity Inclination Risk profile
Bachelor 21-27yrs High Low High risk
Newly married 28-32yrs High High High risk
With children 35-50yrs High Medium Moderate to Low
Pre retirement 50-57yrs Low High Low to Zero
Post retirement 60+yrs Low Low Very Low
Set goals – why do I want to invest ?• Ask yourself:• What are my top financial goals?
– Retirement, House, Holiday, Education,etc
• When do I hope to reach those goals?
• How much money do I need to invest? – Rule of 72
• How do I want to approach investing?– Disciplined/Adhoc
• Find out what kind of investor you are – How comfortable am I with the idea that I may sometimes lose money if
I want to grow my savings faster?
Where to invest - Diversification
• What types of investments do I understand and want to buy?
• Some types of investments grow faster than others. A good mix of different investments will help you get enough growth, while keeping losses in balance.
• Am I comfortable choosing my own asset mix? If not, get some expert advice
Asset Classes• Through asset allocation, you can spread your money across different classes of
investments, including:• Cash and cash equivalents
– Low risk, low return
• Investment Clubs– Enjoyable, Educational, Slow
• Fixed income investments: T-bonds, T-bills, corporate bonds– Fixed steady income. Can be eroded by inflation
• Equity/Shares investments – Offer the potential to make far more than either a fixed income investment or cash
equivalent. – Affected by company growth, Economic growth
• Business ventures– Very high returns, Expertise, day to day management,
• Real Estate– Appreciates with time ,Illiquid, large capital outlay
Choosing an Investment
• Speculative Investments – Undeveloped land– Aggressive growth stocks
• Moderate Risk Investments – Blue chip companies– Quality growth stocks
• Low risk Investments– Government bonds– Corporate bonds
• Cash and cash equivalents
Conclusion
• Keep track of your investments• Take advantage of Tax benefits and compound
growth • Keep good records of your investments so you
will know how well each one does.• If you have an adviser, check that he or she is
following your investment instructions. • Start NOW!!