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| Long Term Investing |
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Stocks and Bonds are the Main Components of most LONG-TERM Investing Strategies but Real Estate is playing an increasing role. The first decision you make is whether to choose the components yourself or to give those choices to a Mutual Fund Manager
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Stocks
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Represent individual ownership in corporations
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Are more volatile but over time have a higher long term rate of return averaging 11% per year.
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Own more than one stock in a diversified portfolio to prevent severe lows and highs in your assets
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Bonds
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Return more than bank savings or CDÂ?s but less than stocks over time
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Pay interest at a set percentage payable at times set forth by the issuer
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Have a face value but may trade at a discount or premium based on market factors, they do not generally vary as widely as individual stocks do
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pay higher rates of interest if the underlying companyÂ?s financial status is riskier
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with high interest may be called in early if the issuer feels they can issue newer ones at a lower rate
- Real Estate
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Your own home
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In the San Francisco Bay area your residence must be viewed not only as your emotional home but also as an investment
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If you have a large home, selling it and downsizing may be an important part of your retirement plan
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If you stay in your home until you die or can no longer care for yourself, your home becomes a large part of what may pay for your final years or be passed on to your heirs
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Private ownership, individually or with others, of individual properties that are rented
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You may actively manage all aspects or hire a management company to make most decisions
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If you own property, seek legal advice and make appropriate wills & trusts for unplanned dispositions
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REITs (Real Estate Investment Trusts)
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Traded like stocks - each has a ticker name
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A common way of owning real estate , generally operated & taxed like a partnership
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You are a passive investor - you do not make any day to day decisions about which properties are owned or how they are operated
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Can be purchased through many financial institutions, including mutual fund companies
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Mutual Funds investing
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A method of investing in stocks, bonds and/or commodities whereby the decisions about particular components of a portfolio of financial instruments are ceded to the fund manager(s). The managers are paid by fund fees based on purchase price, sales price or assets held
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There are an extraordinarily wide range of funds to choose from that reflect the same preferences you make when choosing individual securities
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Domestic, international or both
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Type of Instrument in Fund: Stocks, Bonds, Real Estate, Cash & Treasury Instruments or blend
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Size of Companies in Fund: Large Caps, Mid Cap, Small Cap, Micro Cap or balanced
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Types of Industries: Specific business sector or a combination?
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