1 Investing  Making money with money  Investing = Saving  It involves risk—you can lose your $$

2 Remember our 3 tools to save?  Savings Account  Money Market Account  Certificate of Deposit (CD)

3 What are some ways to invest?  Stocks  Bonds  Mutual Funds  Currency  Real Estate

4 Unique Investments…  Collectables

5 Rule of 72’s  The time or the interest rate you need to double your money  72/t=int  72/int=t

6 Simple Interest Vs. Compound Interest  Simple – Interest paid only on principle amount  Compound- Interest paid on principle and also on previously earned interest *See Interest Worksheet

7 Retirement Plans  Pension Plans  A retirement plan set up by your employer  IRA’s  Must wait until 59 ½ to access money  Special tax benefits  Used if employer does not offer a pension plan

8 Retirement Plans  401K  403B  SEP Plans  Plan if you worked for a small business

9 Mutual Funds  A collection of investments  Diversification  Minimize risk  Professional manager  Many investors

10 Liquidity $Ability to convert your assets to cash quickly  Cash  Stocks  Houses/Cars/Jewelry

11 Dollar Cost Averaging  Letting your money work for you over time Diversification  Spreading your money out over different investments  Ie: stocks, bonds, mutual funds, etc. Investing Choices

12 Now What?  How does diversification help limit risk?  How does age and financial situation affect how you make investment decisions?

13 The Stock Market

14 Stock Represents ownership in a corporation

15 Market Value $The amount of money you can sell your investment at in the market place.

16 Stock Exchanges Indexes Stock Exchanges Indexes  NYSE  AMEX  Nasdaq  London, Japan, etc  S&P 500  Dow  Nasdaq Composite  NIKKEI in Japan

17 Dow Jones

18 Dividends $Share of the profits from a corporation $Receive dividends for each share

19 How are earnings made on stocks? $Dividends. $Dividend are usually paid quarterly $Buy Low & Sell High

20 Advantages of Stock Investments $If the market value goes up, the gain can be considerable $Liquid $Money is easily accessible

21 Disadvantages $If the market value goes down, the loss can be considerable $Time

22 Stocks $A block of stock is one hundred (100) shares. $Preferred $Common $Blue Chip $Growth

Stock Line Yahoo Finance - Apple Inc.

24 Who protects the interest of investors by regulating companies that sell stock?

25 Bonds  Carry less risk than a stock  is an IOU, certifying that you loaned money to a government or corporation and outlining the terms of repayment

26 How Bonds Work  Buyer purchases bond  Fixed interest rate  Fixed period of time  When matured it is redeemed for full face value

27 Bond Types  Federal Government  Municipal  Corporate

28 Federal Bonds  The federal government issues bonds to pay for services; military, roads, infrastructure.  Virtually NO RISK!!  Savings bonds, Series EE & HH

29 Municipal Bonds  State or local governments issue bonds for the construction of buildings, roads, schools, etc.  Moderate, if any, risk

30 Corporate Bonds  Issued by a Business to raise money for a capital venture.  Higher risk  Better rates of interest

31 Risk?  US savings bond least risk  Corporate bond  Preferred stock  Common stock most risk