This document summarizes a workshop on evaluating investments presented by Saunders Learning Group. The workshop covers various types of investment risk including financial, market, interest rate, and management risk. It also outlines eight rules for successful investing such as determining objectives, evaluating risks, diversifying investments, and considering tax consequences. The document provides an agenda, definitions of key terms, and discusses factors for measuring volatility and the risk-reward relationship for investments.

1. Workshop
Module Eight:
Evaluating
Investments
Saunders Saunders Learning Learning Group, Group, Newton, Newton, KS
KS

2. Saunders
Learning
Group
provides
a
variety
of
training
programs,
workshops
and
seminars
targeted
to
the
financial
services
industry.
Programs
are
available
in
a
wide
range
of
topics,
and
we
are
specialists
in
developing
custom
programs
that
are
targeted
to
your
needs.
Contact
the
founder,
Floyd
Saunders
at
316-­‐680-­‐6482
or
at
floyd.saunders@yahoo.com
for
more
informaKon.
Saunders Learning Group, Newton, KS Evaluating Your Investments
2
Training from Saunders Learning Group

3. Agenda
Evaluating Risks
Financial Risk
Market Risk
Interest Rate Risk
Management Risk
Successful Investing
Eight Rules for Successful Investing
Saunders Learning Group, Newton, KS Evaluating Your Investments

4. “In this world nothing can be said
to be certain, except death and
taxes.”
Benjamin Franklin
Saunders Learning Group, Newton, KS Evaluating Your Investments
4

5. WHY SHOULD YOU INVEST?
Investments
Sound and profitable investment product
- No need for a “boss” nor to have
“customers”
Time to let your money grow
- No need to “go to work” nor “manage people”
PASSIVE INCOME
Saunders Learning Group, Newton, KS Evaluating Your Investments

6. 3 THINGS YOU NEED
TO START INVESTING
Money To Invest
Stable Finances
Knowledge on
Investments
Saunders Learning Group, Newton, KS Evaluating Your Investments

7. MONEY TO INVEST
A regular savings plan
Reduce expenses
Generate more cash flow
Saunders Learning Group, Newton, KS Evaluating Your Investments

8. STABLE FINANCES
A consistent budget plan
Absence of bad debts
An emergency fund
Saunders Learning Group, Newton, KS Evaluating Your Investments

9. KNOWLEDGE ON INVESTMENTS
Attend “money” seminars
Self-study on investments
Learn from experience
Saunders Learning Group, Newton, KS Evaluating Your Investments

10. Evaluating Risk
! Investors
have
important
reasons
for
understanding
the
risks
involved
with
each
type
of
investment.
! Risk
evaluaKon
determines
if
an
investment
is
likely
to
rise
or
fall
in
value,
and
how
large
its
change
is
likely
to
be.
! VolaKlity
is
the
word
use
to
describe
investment
risk.
! VolaKlity
actually
refers
to
an
investment's
tendency
to
fluctuate,
or
change
its
value,
over
Kme.
Saunders Learning Group, Newton, KS Evaluating Your Investments

11. Risk – Reward Tradeoff
! Another
approach
to
thinking
about
porQolio
risk
involves
the
reward
side
of
the
risk-­‐reward
tradeoff.
! You
can
compare
a
porQolio's
return
to
that
of
a
relaKvely
risk-­‐free
investment,
such
as
the
inflaKon-­‐
adjusted
return
on
a
short-­‐term
(3
months
or
less)
U.S.
Treasury
bill.
! you
should
receive
greater
compensaKon
for
taking
more
risk
(though
there's
no
guarantee
it
will
work
out
that
way,
of
course).
! Another
way
to
evaluate
risk
is
to
esKmate
the
chances
of
your
porQolio
achieving
a
desired
financial
goal.
In
this
case,
"risk"
means
the
odds
that
your
porQolio
will
succeed
in
meeKng
a
specific
financial
goal.
Saunders Learning Group, Newton, KS Evaluating Your Investments

12. Risk Reward Matrix
Saunders Learning Group, Newton, KS Evaluating Your Investments

13. Financial Risk
! The
possibility
that
you
will
lose
money
when
you
invest
in
a
company
that
has
debt,
if
the
company's
cash
flow
proves
inadequate
to
meet
its
financial
obligaKons.
! When
a
company
uses
debt
financing,
its
creditors
will
be
repaid
before
its
shareholders
if
the
company
becomes
insolvent.
! Financial
risk
also
refers
to
the
possibility
of
a
corporaKon
or
government
defaulKng
on
its
bonds,
which
would
cause
those
bondholders
to
lose
money.
Saunders Learning Group, Newton, KS Evaluating Your Investments

14. Market Risk
! The
risk
that
there
will
be
no
market
or
that
the
market
for
that
investment
will
be
so
poor,
that
you
are
forced
to
sell
at
a
loss.
! Liquidity,
which
is
how
quickly
into
cash
without
price
concessions
is
closely
related
to
market
risk.
Saunders Learning Group, Newton, KS Evaluating Your Investments

15. Interest Rate Risk
! Interest
rate
risk
is
the
uncertainty
of
future
changes
in
the
rates
of
interest.
Saunders Learning Group, Newton, KS Evaluating Your Investments

16. Management Risk
! Management
risk
refers
to
the
chance
that
company
managers
will
put
their
own
interests
ahead
of
the
interest
of
the
company
and
shareholders.
Saunders Learning Group, Newton, KS Evaluating Your Investments

17. Measuring Volatility
! One
of
the
most
criKcal
factors
to
anyone
invesKng
in
the
stock
market
is
their
own
personal
level
of
risk
aversion.
! An
investor's
amount
of
reward
is
determined
by
their
risk
tolerance.
! When
it
comes
to
trading
stocks,
high
reward
comes
with
high
risk,
and
low
reward
comes
with
low
risk.
One
helpful
tool
in
assessing
the
risk
associated
with
a
given
stock
is
its
beta
level.
A
stock's
beta
is
a
measure
of
its
variability
or
volaKlity
as
compared
to
the
stock
market
itself.
! ConservaKve
investors
would
maintain
a
lower
porQolio
beta
between
0.0
and
1.0
! Investors
seeking
bigger
returns
might
target
a
beta
of
between
1.5
and
2.0.
Saunders Learning Group, Newton, KS Evaluating Your Investments

18. Successful Investing – Eight Rules
1. Determine
your
objecKves
2. Evaluate
the
risks
3. Diversify
across
several
investments
4. Don’t
make
an
investment
unKl
you
understand
it
5. Measure
risk
carefully
6. Invest
for
the
long
haul
7. Protect
your
losses
-­‐
Develop
a
Kming
policy
to
know
when
to
sell
8. Consider
tax
consequences
Saunders Learning Group, Newton, KS Evaluating Your Investments

19. Rule One - Determine your Objectives
Safety
Tax
Benefits
Growth Income
Saunders Learning Group, Newton, KS Evaluating Your Investments

20. Rule Two - Evaluate the risks
! The
lower
the
risk,
the
lower
the
return
! The
higher
the
risk,
the
higher
the
return.
R
i
s
k
Saunders Learning Group, Newton, KS Evaluating Your Investments
R
e
t
ur
n

21. Rule Three - Diversify
! DiversificaKon
across
types
of
investments
deduces
risks
! Asset
allocaKon
is
strategy
to
diversify
across
types
of
investments
based
on
your
desire
to
balance
growth
and
income
with
safely.
! It’s
essenKally
not
pudng
all
your
eggs
in
one
basket
Saunders Learning Group, Newton, KS Evaluating Your Investments

22. Rule Four – Don’t Invest in What you Don’t
Understand
! Take
Kme
to
study
financial
markets
— Read
books
-­‐
Figuring
Out
Wall
Street
— Take
a
few
classes
— Learn
to
keep
up
with
financial
news
! Talk
with
other
successful
investors
! Interview
several
investment
advisors
! If
it
seems
like
it
too
good
to
be
true
.
.
.
It
most
likely
is.
Saunders Learning Group, Newton, KS Evaluating Your Investments

23. Rule Five – Measure Risk Carefully
Consider:
1. Need
for
growth
2. Need
for
current
income
3. Safety
of
Principal
4. Availability
of
funds
(Liquidity)
5. Effect
of
taxes
Saunders Learning Group, Newton, KS Evaluating Your Investments

24. Rule Six – Invest for the Long Haul
Saunders Learning Group, Newton, KS Evaluating Your Investments

25. Rule Seven – Protect Your Loses
! Set
limits,
at
8
to
10
%
below
your
purchase
price,
with
stop
lost
limit
orders
! OpKon
trading
is
ohen
used
to
create
a
sort
of
“insurance”
on
trades
Saunders Learning Group, Newton, KS Evaluating Your Investments

26. Rule Eight – Consider Tax Consequences
! A
Roth
IRA
vs.
a
regular
IRA
=
Allows
for
tax
free
growth
and
tax
free
withdrawals
! Aher
tax
returns
on
government
bonds
may
be
less
than
the
tax
free
returns
from
municipal
bonds
! ContribuKons
to
a
401k
are
made
with
pre-­‐tax
dollars,
reducing
your
taxable
income
in
the
years
contribuKons
are
made
! Real
Estate
invesKng
allows
for
deducKons
for
expenses
and
depreciaKon.
Saunders Learning Group, Newton, KS Evaluating Your Investments

27. Questions
Saunders Learning Group, Newton, KS Evaluating Your Investments

28. Post Workshop Action Plan
! Complete
the
Post
Workshop
AcKon
Plan
Saunders Learning Group, Newton, KS Evaluating Your Investments
28

29. Reference Material
Family Financial Freedom
140 pages
ISBN 978-1-60-746269-9
Available Formats: 6"x9" paperback, PDF download or eBook
Link to order:
http://www.fastpencil.com/publications/4498-Family-Financial-Freedom?
tid=bookbuy#read_book
Can be ordered from Amazon or Barnes and Noble in paperback.
Available on Kindle, Nook, iPad and other popular e-readers.
For iPad and iPhone:
https://itunes.apple.com/us/book/family-financial-freedom/id556704978?
mt=11&ls=1
Available on the nook at:
http://search.barnesandnoble.com/booksearch/isbninquiry.asp?
EAN=2940015149609
Book summary: You might be struggling to make ends meet, but
achieving true financial freedom is still possible. The good news is virtually
anyone with a desire to learn and the willingness to plan can achieve a
considerable degree of financial security.
This book is a road map to the personal financial freedom you want and
deserve. There are no quick-rich schemes here, just common sense advice on
how to manage your money, protect your family from risks and start making
the moves to being more financial secure.
Saunders Learning Group, Newton, KS Evaluating Your Investments

30. Family Financial Freedom Seminars
• This series of seminars on family financial freedom is available to all trainers,
educators and professional advisors in the financial services industry.
• The series of seminars can be taught with or without the book, “Family Financial
Freedom”.
• Here is a full listing of seminar topics:
1. Gedng
Started
2. Making
Your
Money
Work
For
You
3. Building
the
Base
4. Securing
the
Base
5. Financing
Your
Future
6. Mutual
Funds
7. Real
Estate
8. Your
investments
9. ReKre
in
Comfort
10. Passing
On
Your
Wealth
11. How
Professional
Can
Help
• A leader’s guide and participant’s workbook is also available.
Order your copy from Scribd
• Contact the author, Floyd Saunders for pricing and order details to
purchase the entire series of seminars: floyd.saunders@yahoo.com
Saunders Learning Group, Newton, KS Evaluating Your Investments