1.S: Summary

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Congratulations ‒ You Have Finished Chapter 1 ‒ Introduction, Overview, and Risk versus Return

You have reached the end of chapter 1, Introduction, Overview, and Risk versus Return. In this chapter, you have:

Been introduced to the definition of an investment and the basic characteristics of investments ‒ You now know what a prudent investment is! An investment is any vehicle that we can place resources into with the reasonable expectation of income, aka cash flow, or growth, aka capital gains, or both
Reviewed the major asset investment alternatives ‒ Overview of the Investment Universe
Explored the relationship of risk and return ‒ Do you want to eat well or do you want to sleep well?
Identified the differences between an investor and a speculator/trader
Investigated short-term “cash” investment alternatives ‒ A Place to Park Your Money
Discussed aspects of short-term “cash” investments with your fellow students

You should now be able to:

Given a typical investment, identify its characteristics including the cash flow (income) and capital gains (growth) components, and identify the advantages and disadvantages of the investment
In a brief two- to three-sentence description, succinctly describe the major investment alternatives including stocks, bonds, mutual funds, and short-term “cash” investments
Explain the historical relationship of risk and return ‒ Do you want to eat well or do you want to sleep well?
Research short-term “cash” investment alternatives including demand deposit accounts such as savings accounts, Certificates of Deposits, money market accounts and money market mutual funds, and Treasury Bills
Describe institutional short-term investment alternatives such as corporate paper and banker's acceptance notes
Optionally, calculate the future values of a lump sum principal investment and a series of investments

We told you not to worry, right? It was not that hard, was it? If you are still a bit fuzzy on some topics, that is okay. Go back and read the text and listen and watch the presentations again. Much of the task of learning about investments is just getting past the odd and strange names that we hear all the time on the television but don’t really know what they are talking about. Well, now you know more about what they are talking about, don’t you?

Your Feedback, Please

Are you getting an education about investments? We hope so! Our goal is for this class to be one of the few classes that you remember 10 or 20 or more years from now. We hope that you can say to yourself, “Ya’ know, that Introduction to Investments class really helped me.” There is also a free chat group consisting of individuals who are using the concepts, techniques, and skills we learn in our class. Come join us! Perhaps you might want to start your own journal to help you organize your learning process using your computer or mobile device. We welcome any and all questions, comments, criticisms, suggestions, complaints, etc. We want you to be the best investors the world has ever seen!

In our next chapter, we will investigate Mutual Funds: Investments for the Masses. The chances are very high that you will have a job with a company that offers you some kind of employer-sponsored retirement plan. That plan will almost certainly have mutual funds as the investment alternatives. As we will see, there are more mutual funds in the investment universe than visible stars in the night sky. (There are about 9,000 visible stars in the sky. There are approximately 12,000 mutual funds.) Choosing a mutual fund is extremely difficult, especially for those who have had no training or experience whatsoever. You, Dear Students, are going to be the Investment Gurus for your family, friends, and fellow co-workers. You Can’t Let Them Down! Thank you so very much for being in our class and we will see you in our next chapter.