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17 Cards in this Set

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what is a share

part ownership of a company


- a share entitles you to dividends and you can vote at general meetings

how do you buy shares

u can buy them on the share broker using a broker or broking service

how does the sharemarket work

The stock market brings together buyers and sellers, enabling them to exchange securities, like shares, bonds, investment trusts

how are the share prices determined

a potential company will have more and higher priced shares but an unknown, not trusted company will have lots of shares at a small price, "the more you have to sell the lower the price"

advantages of investing in shares

you can make a capital gain


financial growth


can make dividends

disadvantages in investing in shares

if you buy at the wrong time


legislative risk and volatity


loss of capital gains

difference between a bull market and a bear market

bull: when the share market is strong and prices are rising over a period of time




bear: when the share market is weak and prices are falling over a period of time

capital gains and capital losses

capital gain - a profit from the sale of property or an investment.



capital loss - A capital loss is the difference between the purchase price of an item and the price at which it sold at.

calculating capital gains




as a percentage

selling price x 100 - cost (now) x 100




the capital gain / original cost x 100

dividends

a sum of money paid regularly by a company to its shareholders out of its profits

types of property investment

apartments/units


houses


land - subdivide or build


commercial building (factories)

advantages of investing in property

- you can make some money by renting it out to people


- capital gains


- you as the landlord get to choose who lives in your place and how much you ask for in rent

disadvantages of investing in property

- the tenants can destroy your property


- it may take a while to sell the property


- the property may decrease in value

things to consider when investing in property

- location, location, location


- close to social locations e.g public transport, schools, shopping centers


- land content of the property


- fees and costs associated with the purchase


- loan costs

risk vs reward

A financial analysis comparing the potential

gains from a project or property against the


potential losses. The greater the risk, the greater


the reward should be.

diversificaton

A risk management technique that mixes a wide variety of investments within a portfolio.

supp

regular payment made into a fund by an employee towards a future pension