1. Savings and investing
Personal Finance

2. Diversification
Spreading out the risk of a portfolio over many different types of investments
Mutual Funds
Collect small amounts money from many investors
Buy small amounts of equities from many sources
Money Market Accounts
Spreading risk over many different savings accounts

3. Risk vs. Return More risk, more return; less risk, less return
Depends on the goals of the saver
Age
Time
Income
Expenses
Dependents

4. Liquidity Measures availability of money for the saver
If the liquidity is up, return is usually down
Liquidity is basically another way of asking how much time it takes for saver to get the money out of the investment and spend it

5. Balancing risk/return and liquidity depends on the needs of the saver – consider 3 options

6. Dollar-Cost Averaging
Directing regular, small amounts of money toward the stock market
10-15% gross income each paycheck
Automatically Buy low and Sell high

7. Buying Bonds Loaning money with a promise to pay back with interest
Corporate – private company or
Government – public provider

8. Buying Stock Minor ownership in the company
Common Stock
Performance dividends; voting rights
Preferred Stock
Fixed dividends; no voting rights
Convertible Stock
Fixed dividend; voting rights
The links below will give you a chance to see the elements on a stock table and try to play a stock market simulation if you would like
How to Read a Stock Table
Stock Market Game

9. Stock Exchanges Markets for the sale of stock
NYSE – New York Stock Exchange
NASDAQ – National Association of Securities Dealers Automated Quotient
OTC – over the counter
NYME – New York Mercantile Exchange
CBT – Chicago Board of Trade

10. Stock Indices Conglomerate averages of many stocks
Measure the performance of the market
General overview of market performance
DJIA – Dow Jones Industrial Average
30 stable “blue chip” companies
S&P – Standard and Poors
500 diverse companies

11. Performance Bull Market Bear Market Steady rise of the market
Steady decline of the market

12. Retirement plans Individual Retirement Arrangement
Usually tax deferred
no tax now, pay tax later on growth in fund
Roth IRA is tax sheltered
pay tax now, growth not taxed later
Some plans are offered through employers
Your contribution may be matched by your company
401(k) – IRS code for for-profit companies
403(b) – IRS created for employees of non-profits

13. Compound interest
Interest calculated on the initial principal and also on the accumulated interest of previous periods of a deposit or loan.
Check out the link (yellow font) and data about the power of starting your retirement early. If you let compound interest work for you your retirement will be much bigger. The totals below are based on an average US salary of $50,000 per year with no raises. $416/MONTH AT 8% ANNUALLY
If you pay in every month for 40 YEARS = $1,472,039.32
Pay in for first 10 then stop for the last 30 = $847,916.14
WAIT 10 YEARS then pay for the next 30 = $628,672.36

14. Baby Steps Dave Ramsey Small, smart steps will get you to security
Small, smart steps will get you to security
A place where your money is working for you
Not you working for your money
Be Radical
In decision making, not spending
Be Intentional
“On paper, on purpose”

15. Steps $1000 Emergency Fund ($500) $0 of Personal Debt
3-6 Months of Living Expenses ($25,000)
10-15% in a Retirement Account
College Funding $0
“For Your Children”
Get Scholarships
Save and Work
20/20* Down Payment/Life of the Loan (House)
50/50* Living/Giving