CARL WATTS & ASSOCIATES
June 21, 2010
Notes, stocks, bonds, mutual funds, the exchange market, and the fascination of risk and profit ... How much do you know about all this?
We’re not proposing a crash course in investments, but we think it might be useful to know and understand more about the investment instruments next time you venture on the securities market or contact an investment broker..
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Washington DC
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tel/fax 202 350-9002 |
Securities -- Part 1
an Introduction
an Introduction
One thing we all know -- the higher the risk, the greater the potential gain or loss from an investment. On the other side the lower risk may protect your principle but not keep pace with inflation, so you risk losing purchasing power of your principle.
The ideal is to be able to balance the potential risks and rewards and make investments that are consistent with your current financial situation.
Investment returns can be defined as:
The ideal is to be able to balance the potential risks and rewards and make investments that are consistent with your current financial situation.
Investment returns can be defined as:
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Cash flow, meaning spendable income that may be tax exempt or taxable as ordinary income |
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Appreciation, that is the increase in value of an investment (asset) which becomes income when the investment is sold
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Equity buildup, meaning the amount by which a mortgage or other debt balance is reduced by income received from a property
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Tax shelter, which is return from deductions and credits generated by an investment that may offset income from other sources.
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Securities are investment instruments that can bring you that extra income. They are a form of ownership that can be easily traded on a secondary market; they represent financial value in the form of a certificate, or “non-certificate” meaning in electronic or “book entry” only form. Securities “issuers” can be the government, a corporation or any organization which offers evidence of debt or equity.
Securities’ worth comes from the claims their owner is entitled to make upon the assets and earnings of the issuer, and there are laws and regulations which ensure that investors receive all necessary information on the type and value of the securities available for purchase on the market.
Transactions and other dealings with securities are covered both by federal and state level regulations.
Transactions and other dealings with securities are covered both by federal and state level regulations.
U.S. Securities and Exchange Commission (SEC) is the federal agency responsible for enforcing the laws and regulations on the securities industry, the stock and options exchanges and other electronic securities markets.
The Commodity Futures Trading Commission (CFTC) regulates futures and certain aspects of derivatives.
Please stay close and keep in touch for our next newsletters, you may get a taste for all of this. Until then, take care and make it a great week!
