1. Agenda 1. Warm-Up- Savings Quick Write
2. Discuss Savings and Investing
3. Future Debtors

2. Savings Quick Write
On a separate piece of paper titled Savings answer the following prompt in 3-5 sentences:
What is the purpose of saving money and why is it important to save money?

3. Saving and Investing

4. Introducing Investing
Investment: giving up some of your resources now in order to gain later
Essential part of free market system (Win, Win)
People make money because of interest from putting into savings account
Promotes economic growth of the nation
Bank collects money
Bank loans to business
What do businesses do with loans?
What are consequences if little savings available to banks ?
Interest- money paid regularly at a particular rate for the use of money lent

5. 3 Factors to Consider When Investing
1. Rate of Return: How much money will you earn?
Percentage (interest on a savings account)
Dollar amount (investing in a business)
2. Degree of risk: chance of losing money
Saving account=safe
Stock market= more risky
3. liquidity: how easy you can convert to cash
Savings account= very liquid
Real estate= not liquid
In general
Low return= low risk, high liquidity
High return= high risk, low liquidity

6. Building Credit Get a job! Save at least 10-12%
Open a savings/checking account
Pay bills on time!
Open a credit card
Dept. store
Gas card
Visa/MasterCard/AMEX
Don’t apply for too many
Don’t pay annual fees
Use the card for small things, and pay it off IN FULL every month for good credit

7. Mutual Funds
Pools money from hundreds and thousands of investors to construct a portfolio of stocks, bonds, real estate, or other securities
Each investor in the fund gets a slice of the total pie.
A mutual fund provides diversification, spreads risk and provides the convenience of buying and selling shares in the fund on any business day

8. Treasury Notes, Bonds and Bills
Fed Gov’t issues bonds/bills when borrowing for over a year
Gov’t makes periodic interest payments
Regarded as safest of all financial investments
T-bills have 13, 26 or 52 week maturity
Do not pay interest, sold on discount basis (ex $10,000 T-Bill might sell for $9300)

9. Warm-Up
1. What general statements are true about high risk investments?
2. What is the advantage of buying government bonds?

10. Bonds
Certificates sold by a company or government to finance projects or expansion
Typically a fixed return for a fixed period of time
Low risk=low return
Vocab
Principle: how much you pay for the bond
Coupon rate: interest on the bond
Maturity: time when payment is due
Issuer: seller of the bond
Holder: investor who buys the bond
Example:
coupon rate= 5% annually
Maturity= 10 years
Principle= $1000
Owner will receive $50 a year for 10 years

11. Retirement Investments
Males should invest 10%
Females 12%
Why?
People living longer
Early retirement
401 (K)
Retirement account through your employer
Automatic, free deduction from your paycheck
Some companies match your contribution
Put into an investment fund to make interest
Collect at age 59.5

12. 10 Rules of Investing 1. Start early Time=money Compound interest
Time to ride out the low times
2. Diversify
Invest in many different stocks, bonds, and real estate
High, medium, and low risk
3. Keep costs low
Don’t pay too much commission when you invest
4. INVEST IN YOURSELF
Train/educate to get more $$$
Real estate
5. Get help!
Talk to a financial advisor
6. Be Patient
Reduce risk to buy and sell quickly
7. Stay out of debt
Real estate and student loans okay
8. Let your profits run
Long term investments make more $$$
9. Set a goal
10. Remain honest

13. The Stock Market

14. The Stock Market
“Nothing has created more millionaires in this country.”
Besides bonds, corporations can raise $$$ by selling stocks
Stocks are issued in portions called shares, the owner is called shareholder
Shares represent partial ownership in a company
Stocks also called equities

15. 2 Ways to Make Money in Stocks
1. Capital Gains: buy a stock for a low price and sell it when it goes up
2. Dividends: a portion of a company’s profits gets distributed to shareholders quarterly

16. Types of Stocks Income stock: Growth stock: Common stock:
pays dividends
Usually older, established companies
Growth stock:
Few dividends
Company instead reinvests profits for its own growth
Common stock:
Voting rights to determine company’s decisions
Preferred stock:
Non voting
Receives dividends before common stock holders
If company goes out of business, they get their money back first
Stock splits:
when a single share is divided into 2 or more shares
Occurs when price of a share gets too high, discouraging people to buy

17. Agenda
1. Why would someone want to buy preferred stock over common stock?
2. If you were to give someone advice about picking stocks what is the most important tip you would tell them?

18. How Stocks are Traded Stockbroker:
person who links buyers and sellers of stocks
Advises individuals as to what stocks they should buy
Brokerage Firm
Stockbrokers work for businesses that specialize in trading stocks
Charge a fee or commission for each transaction
Online

19. Stock Exchanges Major markets for buying and selling stocks
Major Exchanges
NYSE
Largest and most powerful
Restricted number of members who can trade
Handles the largest, most established, and successful companies
Blue chip companies
NASDAQ
Sells slightly riskier stocks from less established companies
High tech and energy stocks
Over-the-counter
Traded electronically
Not an organized exchange

20. Foreign Exchanges Tokyo Stock Exchange Berlin-Bremen Exchange
Athens Stock Exchange
Korean Stock Exchange
Zimbabwe Stock Exchange

21. Measuring Stock Performance
Dow Jones Industrial Average
Most used index to tell investors how stocks are doing
Made up of 30 big companies
Represent every important sector in the stock market
S&P 500
Top 500 companies in the US
Bull vs. Bear Market

22. Index Funds
Mutual fund holding a group of stocks that closely matches an established index
S&P 500
Dow Jones

23. Reading Stock Tables Vocabulary
Sym: symbol of the stock, usually 2 or 3 letters
Div: dividend given to shareholders the last quarter
Yld%: yield, dividend divided by current price
Vol: volume, or the amount of shares that have been traded that day
Hi: highest price for the stock during that day of trading
Low: lowest price for the stock during that day of trading
Close: price of stock at the end of the day
Chg: difference between last week’s price and the most recent price

24. http://money.cnn.com/magazines/moneymag/money10 1/

25. Warm Up 5/9/14
Copy agenda.
What could you do right now to be more financially responsible?
What are the two others terms for stock?