1. Stock Market Analysis and Personal Finance
Mr. Bernstein
Opportunity Costs and Strategies,
pp 19-25
February 19, 2013

2. Stock Market Analysis & Personal Finance Mr. Bernstein
Opportunity Costs
The cost of not taking an action
You cannot both save and spend the same dollar
If you spend, you will not earn interest on savings
If you save, you will not gain satisfaction of consuming

3. Stock Market Analysis & Personal Finance Mr. Bernstein
Future Value The amount $1 today will be worth at some point in the future Interest earned compounds FV = $$ x (1+interest rate)number of years Example: $1 in ten years at 5% interest rate $1 X = $1.629

4. Stock Market Analysis & Personal Finance Mr. Bernstein
Present Value The amount needed today to be worth $1 at some point in the future $1 is discounted at a given interest rate PV = $$ / (1+interest rate)number of years Example: $1 in ten years at 5% discount rate $1 / = 61.4 cents

5. Stock Market Analysis & Personal Finance Mr. Bernstein
Basic Financial Planning Strategies Obtain (Income) Plan (s/t, intermediate and l/t budget) Spend (Realistically) Save (Regularly) Borrow Wisely Invest (Growth Wealth) Manage Risk Plan for Retirement