Investing & Savings Consumer Ed Unit 9

Money Options Save Spend Invest Give Away

Reasons for Saving Rainy Days3-6 months worth of income Major PurchasesHouse, Care, items, College RetirementMoney to live on after no longer working

Saving Investments  Savings Accounts  CD’s  Money Market Accounts  Bonds

Savings Account Types Basic -18 years old control until then parents have authority Low interest rates, very safe CD’s -minimum required, must be held for certain time frames Higher returns Money Markets-minimum required, higher interest rates Can use at minimal times

Interest Compound-keeps adding on top of interest Simple-straight interest added on for one time

Investing Short Term vs. Long Term Liquidity-able to change into cash quickly Risk –what you are willing to gamble on vs. Return-what you will get back on your money that you invested

Reasons to Invest Reach Financial Goals Live on investments without working To increase monetary values For unexpected occurrences

Corporate Stocks def. is a share of ownership of a company Stock is created for money needed to run the business **Ex: 100 shares of McDonald’s stock purchased for $2250 in 1965 on 1 st offering-is worth more than $1.4 million in 1995.

Stock Market Venues NYSE-New York Stock Exchange-major corporations are traded here on Wall Street NASDAQ-Is where firms are listed electronically are sold – small companies use this General Public cannot buy stocks at these two places

Stock Purchasing Stock Broker-is who handles the buying and selling of stock for you Types of Stock Common-basic stock no dividends are paid Preferred-pays a dividend is paid

Stock Investment Pro Dividends Only out the money you paid for stock Huge potential for gains Con Can lose Not a guarantee Hard to purchase Hard to decide on which ones to purchase

Mutual Fund def. a group that manages numerous amounts of money under one heading that is chosen and monitored by the fund manager (broker) Combination of stocks and bonds 401K programs use this option Are broken into groups-by risk, types, and location

Mutual Funds Pros Can diversify your money easily Tax Advantage Cons Must have a minimum of $1000 to invest Load-a fee to be a part of the fund

Retirement Plans Are incomes that are used after retirement Pension-funded by company 401 K Plans-funded by you and company IRA-personally funded before payroll taxes Roth IRA-personally funded after payroll taxes

Real Estate Values in real estate fluctuate; location is key, timeframe to hold on to property Item of value can own and then sell, can use for rental income, can live in

Collectables Art, collectables, must know market and be prepared to hold for perfect moment to sell

Investing Strategies Diversification-spread out your money in different areas Know your limits-on risk and return Only invest what you can bear to lose Stay current on financial trends