Texas Council on Economic Education Building Wealth for the Long Term Welcome David Pruitt Program Trainer Texas Council on Economic Education 1801 Allen Parkway Houston, Texas 77019 713-655-1650 December 1, 2018 Building Wealth for the Long Term

Building Wealth for the Long Term Our Sponsors This workshop and the accompanying materials are made available to teachers through the generous support of Discover Financial Services and the Council for Economic Education. December 1, 2018 Building Wealth for the Long Term

Pretest and Registration Please complete a pretest over investments. You will hold the pretest and answer sheet until the end of the session. Complete and turn in the registration form. On the registration form mark that you are receiving Learning Earning and Investing and 5 free student SMG team registrations for the Spring 2013 After you have completed the pretest and registration forms, please review the commitment form. After we discuss this form, please make a decision and return it on the table. December 1, 2018 Building Wealth for the Long Term

Building Wealth for the Long Term Lesson 12

Building Wealth for the Long Term Why Invest In our age why is it important to pass on to our children the need to save and invest? December 1, 2018 Building Wealth for the Long Term

Building Wealth for the Long Term How is it possible to become a millionaire by saving regularly. December 1, 2018 Building Wealth for the Long Term

Lesson 12 Visual 1 Three Rules for Building Wealth Start early. Give money time to grow. Buy and hold. Keep your money invested. Diversify. Don’t put all your eggs in one basket. December 1, 2018 Building Wealth for the Long Term

Building Wealth for the Long Term Lesson 12 We will look at two cases involving normal wage earners. Charlayne and Marcus. One becomes a millionaire…. As you view each of the charts below, jot down your ideas of what is happening with Charlayne and Marcus. December 1, 2018 Building Wealth for the Long Term

Lesson 12 Visual 2 Charlayne Becomes a Millionaire-- Accidentally

Lesson 12 Visual 2 (continued) Charlayne Becomes a Millionaire-- Accidentally

Lesson 12 Visual 3 Charlayne Becomes a Millionaire-- Accidentally

Lesson 12 Visual 4 The Magic of Compounding When you save, you earn interest. When you take the interest out and spend it, it stops growing. But if you leave the interest in your account so it can grow, you start to earn interest on the interest you earned previously. Interest on interest is money you didn’t work for. It is money your money makes for you! Over time, interest on interest can increase your total savings greatly. December 1, 2018 Building Wealth for the Long Term

Lesson 12 Visual 5 Marcus’s Mistake

Lesson 12 Visual 6 Marcus’s Mistake

Building Wealth for the Long Term Share with a partner what is happening. I will call on several of you to share with the group. December 1, 2018 Building Wealth for the Long Term

Lesson 12 Visual 7 Buy and Hold In order to leave money in savings or investments, you have to do these things: Spend less than you receive. How? Earn more by improving your formal education or job skills. Spend less by using a budget to keep track of where your money is going. Become connected to financial institutions. Open and maintain accounts at mainstream financial institutions--banks, credit unions and brokerages. December 1, 2018 Building Wealth for the Long Term

Lesson 12 Visual 7(continued) Buy and Hold Manage your credit responsibility. How? Limit the number of credit cards you have. Limit your purchases to what you can pay off each month. Apply for loans when you are confident that your current income (in the case of college loans, future income) will allow you to repay the loan. December 1, 2018 Building Wealth for the Long Term

Lesson 12 Visual 8 The Stock-Market Roller Coaster If you buy and sell on the ups and downs, you may lose money. But if you buy and hold on for the long term, the ups are greater than the downs. December 1, 2018 Building Wealth for the Long Term

Lesson 12 Visual 9 Don’t Put All Your Eggs in One Basket If you put all your money in one stock, a disaster befalling that stock will hit you hard--as if you had put all your eggs in one basket and then dropped the basket. With your money spread out across variety of assets (stocks, bonds and cash, for example), you’re not hurt as badly when any one asset does poorly. December 1, 2018 Building Wealth for the Long Term

Building Wealth for the Long Term Lesson 12 Visual 10 Forms of Saving and Investing: Some Benefits and Costs Savings accounts: provide a small but steady return. Certificates of deposit: very safe, but instant access carries a penalty. Bonds: lending money to a corporation or government, with a promise of higher returns than those offered by bank savings accounts and CDs. Stocks: part ownership in a company, offering higher risks and, potentially, higher returns than some other investments. Real estate: the risks and benefits of being a landlord. December 1, 2018 Building Wealth for the Long Term

Lesson 12 Visual 11 Investment Situations You have $5,000 to invest. No other information is available. You have $4,000 that you’ll need six months from now. You inherited $10,000 from your great-aunt; she has suggested that you save it for use in your old age. You are just starting a career and can save $50 per month for retirement. A new baby arrives, and Mom and Dad plan to save $100 a month for the child’s college education. December 1, 2018 Building Wealth for the Long Term

Lesson 12 Visual 12 The Pyramid of Risks and Reward Highest Risk--Highest Potential Return or Loss Lowest Risk--Lowest Potential Return or Loss December 1, 2018 Building Wealth for the Long Term

Activity What would you do? December 1, 2018 Building Wealth for the Long Term

Senario 1 You’ve been given $5,000.00 No other information given.

Senerio 2 You have $4,000 that you will need to use 6 months from now.

Senerio 3 Your Great Aunt has left you $10,000. She has asked that you save it for the future.

Senerio 4 Your Great Aunt has left you $10,000. She has asked that you save it for retirement in your old age.

Senerio 5 You have $50.00 per month that you can save for retirement.

Lesson 12 Visual 13 Mutual Funds A mutual fund pools investors’ money. The fund puts its investors’ money into the markets on their behalf. In effect, investors own small amounts of many different assets. Mutual funds enable investors to avoid the risk that comes from owning any one asset. In other words, mutual funds make it easy to diversify. December 1, 2018 Building Wealth for the Long Term

Building Wealth for the Long Term In Closing…. What are three things you learned from this lesson? December 1, 2018 Building Wealth for the Long Term

JOIN THE

What Is the Gen i Revolution? An interactive, web-based computer game. Designed to teach students the basics of personal finance and investments. 15 missions designed to be playable as stand-alone missions. Also effective as a supplement to classroom instruction.

The Story Line People are losing confidence in their ability to save and invest. This confusion is called “the Murktide”.

The Story Line The mysterious Monique founded her movement, the Gen i Revolution, to fight the Murktide. Students take on the role of operatives in Monique’s movement. In each of the 15 missions, players are briefed and trained by Monique to help their contacts battle the Murktide.

The Object of the Game Accumulate as many points as possible by correctly answering questions and giving good financial advice to contacts.

Missions 1. Help Angela build wealth for the long run. 2. Help Verona choose a tentative career. 3. Help Matt to consider whether to continue formal education after he graduates from high school. 4. Help the O'Neil's save $300 a month for a down payment on a new home. 5. Teach Justin about credit.

Missions 6. Advise Kai on how to invest his grandmothers $10,000. 7. Convince Paul, Fred and Diana to reconsider their choice of financial institution. 8. Help Uncle Louie learn the basics about stocks. 9. Teach Tyrone and Felicia how to invest in bonds. 10. Teach a group of students how to invest in mutual funds.

Missions 11. Advise a Gen I $10 million donor on her investment. 12. Show Jasmine what determines stock prices. 13. Advise Markos on how to weather a crash in the scholarship fund. 14. Advise political leaders on their economic forecasts. 15 Conduct the Red Roosters annual financial planning workshop.

How to Play http://www.genirevolution.org/demonstration.php Play the Player’s Guide video

Explore Gen I Revolution Take a few minutes to explore the program. How can you use this in the classroom? December 1, 2018 Building Wealth for the Long Term

In closing…. Please take time to complete the post test. Reminder that each of you will receive 5 free registrations for attending this training today.

Texas Council on Economic Education Building Wealth for the Long Term Thank you for coming…. David Pruitt Program Trainer Texas Council on Economic Education 1801 Allen Parkway Houston, Texas 77019 713-655-1650 December 1, 2018 Building Wealth for the Long Term