Investing Wisely

Overview/Description
 After the amazing performance of the stock market over the last few years, Americans have never been more interested in investing. At the same time, the Internet has quickly become the best place to look for information; there is lots of it and it's constantly updated. The best Internet investment sites offer small investors information and analysis previously reserved for Wall Street firms and preferred customers. Now, not only is it available to small investors, it is free. This course stresses that managing, and minimizing, your income tax liability must be a key component of your investment strategy. Although taxes will almost certainly be the greatest expense incurred by any successful investor, investment choices should not be driven by tax-considerations. An investor should consider an over-all investment strategy. This course will set the investor in the right direction, taking tax implications and personal circumstances into consideration. Throughout this course, most of the tax rules or tax values provided in the examples and calculations are based on the year 2001 tax guide. When you are creating your personal financial plan, be sure to use the tax guide rules and values for the current year.

Target Audience
 General American audience

Expected Duration
2.5 hours

Lesson Objectives:

Investing Alternatives

  • recognize the benefits of understanding investment alternatives.
  • identify the methods for measuring the risk associated with investing in stocks and mutual funds.
  • match mutual fund fees with their definitions.
  • identify the characteristics of fixed-income investments.
  • choose either a taxable or a tax-free bond for a given investor.

    • Asset Allocation

  • recognize the importance of properly allocating assets.
  • calculate the appropriate asset allocation based on the age of a given individual.
  • match risk levels to corresponding asset allocation schemes.
  • identify examples of circumstances that indicate when an investment portfolio should be updated.

    • Capital Gains on Investments

  • recognize the benefit of understanding how to manage capital gains on investments.
  • label examples of investments as either tax-efficient or non tax-efficient.
  • identify transaction types that are considered to be taxable sales of mutual fund shares.
  • recognize the transactions that alter the basis of mutual fund shares.
  • calculate capital gains and losses using three different methods, given a scenario.

    • Income Tax and Investing

  • recognize the benefits of understanding income tax rules applicable to the management of an investment portfolio.
  • match special tax situations with examples of appropriate actions that would minimize their impact on capital gains taxes.
  • identify examples of good uses for various investment accounts.

    • Course Number: PD0146