Prepared ByRasha Anan 120050146

 Supervised ByMr. Ibrahim Sammour

University of Palestine Faculty of Finance &Business Administration

DefinitionInvestment Types A Good InvestmentThe 6 Basic Principles of

Successful InvestingTwo Strategies to AvoidInvestment RiskThe Twenty Golden Rules of

Investing

Investment refers to an asset which is purchased with the expectation that it will generate income in the future or its’ value will appreciate in future so that it will be sold at a higher price.

There are usually three participants in an investment:

1.The Issuer2.The Investor3.The Broker

Cash Savings Accounts Debt Instruments Stocks Collectibles Precious Metals Real Estate Investment Portfolio Mutual Fund

Four characteristics should be serve as helpful guidelines in the search for a good investment.

1.What is the price of the entire company?2. Is the company buying back shares?3. What are your reasons for investing in

the company?4. Are you willing to own the stock for the

next ten years?

The 6 Basic Principles of Successful Investing

1. Diversification2. Asset Class Investing3. Asset Allocation4. Rebalancing5. Compounding6. Time

1. Stock picking2. Market timing

In investing parlance, risk refers to the probability of a monetary loss or actual returns from an investment being lower than the expected returns.

Types of Risks1.Capital risk2.Currency risk3.Liquidity risk

4. Credit risk5. Inflation risk6. Interest rate risk7. Market risk8. Legal risk9. Counterparty risk

The Twenty Golden Rules of Investing1.Understand the difference between

investing and speculating 2.Do not borrow, do not buy on margin, do

not leverage yourself and do not sell short

3.Decide whether you invest for income or for growth

4.Bet on the challenger, but do not buy at peaks

5.Invest only in stocks quoted in big boards

6. Observe the 5 percent rule about assets at risk

7. Look at homework as a better guide than advice by other experts

8. Learn how to do fundamental analysis and technical analysis

9. Learn how to detect and analyze market trends

10.Never chase the return of shares you did not buy

11.Always listen to contrarian opinion

12.Appreciate the need for rigorous risk management

13.Accept responsibility of your own decisions

14.Never hesitate to cut losses 15.Do damage control through

limits and profit targets

16.Consider flexibility as one of your best friends

17.Use mathematical models, but understand they are not fail-safe1

18.Factor-in the impact of market liquidity and volatility

19.Appreciate the impact of business risk 20.Look at conflicts of interest as part of

daily life