Savings and Investments: Your Money at Work Financial Literacy Mrs. Dayley Use with Unit 4 of NEFE manual.

Mrs. Dayley – Financial Literacy Savings vs Investments Savings is usually money you set aside for short-term goals. Money in savings may be invested later. Money in savings is very safe. Earns a small amount of money Can pull money out at any time. Investment – When you invest, you set money aside for future income, benefit, or profit to meet long term goals. No guarantee that your money will grow or increase. Loss is possible and it takes time to recover. LONG TERM 11/18/2018 Mrs. Dayley – Financial Literacy

Mrs. Dayley – Financial Literacy Value of Time As you listen to the poem, list five ways that time is valuable to you. Example: To realize the value of a Friday morning, ask a student who spend five hours in restitution. Read students the poem on page 127 of Seven Habits of Highly Effective Teens, by Sean Covey. 11/18/2018 Mrs. Dayley – Financial Literacy

Mrs. Dayley – Financial Literacy Time Value of Money The relationship between time, money, and the rate of return (interest), and their effect on earnings growth. See example on page 46 of Student Guide 11/18/2018 Mrs. Dayley – Financial Literacy

Mrs. Dayley – Financial Literacy Time is MONEY 11/18/2018 Mrs. Dayley – Financial Literacy

Mrs. Dayley – Financial Literacy Compounding The idea of earning interest on interest. 11/18/2018 Mrs. Dayley – Financial Literacy

Mrs. Dayley – Financial Literacy Earned Interest The payment you receive for allowing a financial institution or corporation to use your money. 11/18/2018 Mrs. Dayley – Financial Literacy

Mrs. Dayley – Financial Literacy Rate of Interest Time Money 11/18/2018 Mrs. Dayley – Financial Literacy

Assignment 4.1 The Power of Compounding Page 47 Student Guide

Mrs. Dayley – Financial Literacy Rule of 72 Tells you how long it takes your money to double in value. Divide 72 by interest rate to determine number of years to double. Divide 72 by years to determine rate needed to double your money in a given time period. 11/18/2018 Mrs. Dayley – Financial Literacy

Try It! Apply the Rule of 72 to find the time or rate. Assume you can earn 6% on your money. How long will it take $100 to grow to $200? 72 ÷ 6% interest = 12 years 11/18/2018 Mrs. Dayley – Financial Literacy

Try It! Apply the Rule of 72 to find the time or rate. If you have $200 today and need $400 in eight years, what interest rate do you need to earn? 72 ÷ 8 years = 9% Interest 11/18/2018 Mrs. Dayley – Financial Literacy

See Figure 4.1 The Advantage of Starting Early The Impact of Time on the Value of Money

Read page 50 in Student Guide Assignment 4.2 The Impact of Higher Returns on Savings and Investments

Read text on page 51 in Student Guide Study Figure 4.3 On page 51 of Student Guide

Key Terms Record on listening log. Diversification (52) Inflation (52) Taxes (53) 11/18/2018 Mrs. Dayley – Financial Literacy

Income Investments (Lenders) Savings Accounts U.S. Savings Bonds Certificates of Deposits (CD) Money Market Accounts Corporate and Government Bonds 11/18/2018 Mrs. Dayley – Financial Literacy

Growth Investments (Owners) Stocks Capital Gain Real Estate Collectibles Mutual Funds 11/18/2018 Mrs. Dayley – Financial Literacy

Action Steps “Get Started with Your Savings Habit Now!” Complete Action Steps Page 58

A computer is like a brain because of the way it networks information. Analogy Drawing comparisons in order to show similarities A computer is like a brain because of the way it networks information.

Mrs. Dayley – Financial Literacy Investing Analogies Divide into pairs Complete the following analogy: “Investing is like ______________.” Develop at least three supporting reasons for the comparison. Create a visual representation of the analogy. List reasons on poster. Present analogy to the class. 11/18/2018 Mrs. Dayley – Financial Literacy

Mrs. Dayley – Financial Literacy THE END 11/18/2018 Mrs. Dayley – Financial Literacy