1. Savings And Investing Why you should start saving young AND
The different ways to save and invest

2. Evan And Nancy
We are going to take a peak into the savings and investing lives of two people. We will see who will have a better future and why!
Evan
Nancy

3. Evan’s Profile Evan is going to start investing at the age of 35
Every year from 35 onward he will put $3,000 into an account that grows at a yearly rate of 8%
Let’s say he does this until he is 65…

4. At Age 65… He will have set aside $90,000 of his own money
It will grow to about $367,000
He will have made a grand total of $277,000
Sounds good right?

5. Nancy’s Profile Nancy started investing at the age of 20
She is going to put aside $3,000 a year into an account that grows at a yearly rate of 8%
Let’s say she does this until she is 35 and then does not touch it until she is 65…

6. At age 65… She will have set aside $45,000
YAY!
I’m rich
She will have set aside $45,000
It will grow to about $525,000
She will have made a grand total of $480,000.
Sounds better, right?
You choose:
$277,000 or $480,000

7. The Basics… Savings is the storing of money
Investing is taking a risk with
your money in hopes of making
a lot of money down the road
Interest Rate is the rate at
which your money grows
$80 at 10% you would make $8
Then the next year $88 would
make $8.80

8. Interest (at a rate of 8%)
Beginning of Year
Interest Earned
End of Year
$1,000
$80
$1,080
$86.40
$1,166.40
$93.31
$1,259.71
$100.78
$1,360.49
$108.84
$1,469.33

9. Liquidity A key concept you need to know is LIQUIDITY
How easily and quickly
you can get to your money
With some types of savings and investing plans you can get to your money easily; others you can’t

10. Listen Carefully…
DANG!
I wish I
was as rich
as Nancy
YAY!
I’m rich!

11. Savings Account What is it?
An account that is opened through a bank
Is the most common form of savings for young people.
You can put money into it as often as you want and (depending on each bank’s rules) can take money out as often as you want
Is this type of plan liquid? Why or why not?

12. Pros and Cons
CONS
Most banks require a minimum balance at many banks it is $300
They have very low interest rates (average .06%, but most large banks pay as low as .01%)
Money does not grow quickly
$100 would make $.01 in a year
PROS
You can put as little or as much money into it as you want
It is liquid, so if you need money quickly you have access to it
Insured by the bank - there is little risk
Can set up automatic transfers every month from your paycheck

13. Money Market Deposit Accounts
What is it?
Is similar to a savings account in that you deposit money into it when you want
Typically get it from a bank
However, it is less liquid because each bank sets limits on how many times a month or year you may get money out of it
Has a higher interest rate because of this (average is .26%)
$100 would make $.26 in a year (almost 20 times the amount of a typical savings account)

14. Pros and Cons PROS CONS Liquid (but not as liquid as savings accounts)
Is insured by the bank- little risk
CONS
Higher minimum balance than savings accounts (typically at least $1000)
More fees for having a MMDA - such as annual fees
Question: Are they liquid? Why or why not?

15. 401(K)s and 403(B)s What are they?
They are employer-sponsored retirement savings plans
A 401(K) is offered through a corporate organization (business like UPS)
A 403(B) is offered through a non-profit or governmental organization (like FWISD)
Typically can put in up to $16,500 a year

16. Pros And Cons PROS CONS High return rates (6-9%)
For example if you put in $100 one year it would be $8
Lower taxes. You can contribute to the accounts before you pay taxes, and then pay taxes on it when you are retired and paying a lower tax rate.
Your employers can contribute as well
CONS
Cannot touch your money until you are 59 1/2 or you face a penalty charge of about 10%
Some 401(K)s and 403(B)s invest in the stock market. Therefore there is the chance you can lose some of your profits from savings.
QUESTION: Are they Liquid? Why or why not?

17. Stock What is it? You make money on stocks by returns and dividends
A stock is a share in a business
You essentially own part of a business
You make money on stocks by returns and dividends
Return is the amount of money you make on each share when the company becomes worth more
Dividend is money paid to shareholders for owning part of the business (thank you for trust)

18. Check Fraud- Catch Me If You Can

19. Pros And Cons CONS PROS Very risky
High interest rates (10% average)
If companies are doing well, they can make a lot of money
Excellent long term investment
Can get stocks that pay dividends at the end of the year. (profits shared with stockholders)
CONS
Very risky
Your investment is based on how a company performs. If you bet wrong, you can lose all of your money
It is very time consuming to be well informed about the stock market.
Question: Are they liquid? Why or why not?

20. Moneychimp.com
You will need a computer for this assignment- boot up and log on!
Go to then click on Calculator at the top left of the screen