Lesson 2

Advantages of
Different Types of
Investments
Objective:

 Indicate the advantages of

each type of investment
Direction: Read and answer the questions below. Write the
letter of the correct answer in your notebook or in a clean
sheet of paper.

1. Which is not true about investments?

A. It can make your money grow.
B. It turns money to real property.
C. Investments generate positive or negative income.
D. Investments always give you good returns.

2. If these types of investment are held until maturity and

pre-terminated, investor can gain or lose depending in the
prevailing interest rates at the time of termination.
A. Bonds C. Stocks
B. Bank Deposits D. Mutual Funds
3. These are financial instruments managed by banks which will help
you make the most
of your money.
A. Cryptocurrencies C. Savings account deposit
B. UITF and Mutual funds D. Bank deposits
4. This includes savings account, current accounts, and others that
took place in banks.
A. Bank Deposits C. Bonds
B. Creditors D. UITF
5. Which among these statements is not true about UITF and Mutual
Fund.
A. UITF aims to maximize net gains.
B. UITF is accessed through banks.
C. Mutual Fund is a pool of funds.
D. Both can receive dividends
Review:

What is investment?
Investment is an asset or item acquired with the
goal of generating income of appreciation.

What is appreciation?
Appreciation refers to an increase in the value of
an asset over time.
Review:

What are 3 types of investments?

(1) fixed income and equities,

(2) alternatives to fixed income and equities,
(3) other investment assets.
 Advantages of
Different Types of
Investment
1. Fixed Income and Equities
Investment Type Advantages
A. Stocks (Equity)  Unlimited upside
B. Bank Deposits (Fixed Income)  Known income based on
outstanding principal and
current interest rate
C. Bonds (Fixed Income)  Known periodic payments for
a certain period of time.
 Can’t lose money if bond
investment is held until
maturity.
2.Alternative to fixed income and equities
Investment Type Advantages
A. Mutual Funds  It gives small investors
access to professionally
managed, diversified
portfolios of equities, bonds
and other securities.
 Advanced portfolio
management
 Dividend reinvestment
 Risk reduction
 Convenience
 Fair pricing
2.Alternative to fixed income and equities

Investment Type Advantages

B. Unit Investment trust funds  Same as mutual funds
(UITF)  Easier access because clients
can open an account in any
branch of the bank near
them.
 No entry and management
fees.
3. Other Investment Assets

Investment Type Advantages

A. Currencies  Largest market in the world
in terms of trading volume,
so much liquidity
 Unlike stocks, commodities,
etc., currency asset itself is
a medium of exchange which
people can use to transact.
3. Other Investment Assets

Investment Type Advantages

B. Cryptocurrencies / Digital  Protection from inflation
Currencies  Self-governed and managed
 Secure and private
 Currency exchanges can be
done easily
 Decentralized
 Cost-effective mode of
transaction
 A fast way to transfer funds
3. Other Investment Assets

Investment Type Advantages

C. Commodities  Natural hedge against
inflation
 Negatively correlated with
equities and bonds
 Hedge against geopolitical
risks
3. Other Investment Assets
Investment Type Advantages
D. Real Estate  Generally, appreciates over
time because land get scarce
 Have relatively low
correlations with other asset
classes
 Can be source of recurring
rental income
 May also be a hedge against
inflation because of
inflation-linked rent
escalation clauses
3. Other Investment Assets
Investment Type Advantages
E. Insurance  Gives the insured
individual/entity the
cash/capital to deal with
foreseen adverse financial
consequences.
 May provide certain tax
benefits.
Activity #1

Direction: Compare and contrast the

advantages following types of investments.
1. Currencies vs. Cryptocurrencies
2. Stocks vs. Bonds
3. Mutual fund vs. UITF
Activity # 2
Direction: Write T if the statement is correct and F if it is not about
the advantages of the types of investment.

1. In real state, generally, appreciates over time because land get

scarce.T
2. Unit Investment trust funds (UITF) is same as mutual funds T
3. Bonds provide certain tax benefits. F-(INSURANCE)
4. Bank deposits are known income based on outstanding principal
and current interest rate T
5. Bonds are known as periodic payments for a certain period of
time T
 Application:
A. Stocks (Equity)
(Oral)
Explain briefly the questions below:
1. What could be the primary motivation of
an individual to invest?
2. What factors should be considered in
choosing from the available investment
alternatives?
 Generalization:
A. Stocks (Equity)

.
1 I have learned that _____________.
2. I have realized that ______________.
3. I will apply what I have learned___________.
Assessment:
Direction: Match the investment type in column A with the
advantage in Column B.

Column A Column B
1. Mutual Funds a. Can be source of recurring rental income
2. Real Estate b. May provide certain tax benefits.
3. Insurance c. Unlimited upside
4. Stocks d. Convenience
5. Bank Deposits e. Known income based on outstanding
principal and current interest rate
f. A fast way to transfer funds

A. Stocks (Equity)
Assessment:

Answer:
1. D
2. A
3. B
4. C
5. E

A. Stocks (Equity)