1. NEFE High School Financial Planning Program Unit Three – Investing: Making Money Work for You Unit 3 - Investing: Making Money Work for You

2. NEFE High School Financial Planning Program Unit Three – Investing: Making Money Work for You Saving/Investing Options Savings Account Certificate of Deposits (CD’s) Stocks Bonds Mutual Funds Retirement Plans

3. NEFE High School Financial Planning Program Unit Three – Investing: Making Money Work for You Some background Info… Money grows on the principle of interest Compound interest- interest earned on both your principal (money you invested) and on the interest it earns

4. NEFE High School Financial Planning Program Unit Three – Investing: Making Money Work for You Investing Weekly at 5% Interest 3-B Amount Saved Per Week Value After 10 Years $ 7.00 $ 14.00 $ 21.00 $ 28.00 $ 35.00 $ 4,720 $ 9,440 $ 14,160 $ 18,880 $ 23,600 1

5. NEFE High School Financial Planning Program Unit Three – Investing: Making Money Work for You Investment Tools The basic tools for most investors include StocksBonds Mutual Funds Together known as securities

6. NEFE High School Financial Planning Program Unit Three – Investing: Making Money Work for You A bit about Risk Investments pay a percentage in interest as determined by a bank, stock market or federal reserve. The greater the risk the greater the return (or the greater the risk the greater the fall )

7. NEFE High School Financial Planning Program Unit Three – Investing: Making Money Work for You Stocks Stock: a share of a company When you buy a share you are actually buying a small piece of the company -Buy “certificates of stock” that change value over time -Usually based on the well being of the company you invest in

8. NEFE High School Financial Planning Program Unit Three – Investing: Making Money Work for You How do stocks pay? Have money invested in stock itself and opportunity to collect dividends Dividends: Money paid to share holders when company claims a profit

9. NEFE High School Financial Planning Program Unit Three – Investing: Making Money Work for You A $1,000 investment a decade ago would today be worth: Apple (AAPL) -- $32,280 AAPL Southwestern Energy (SWN) -- $31,880 Cliffs Natural Resources (CLF) -- $26,460 Range Resources (RRC) -- $12,440

10. NEFE High School Financial Planning Program Unit Three – Investing: Making Money Work for You Bonds When you buy a bond you are essentially making a loan of money to a company or government Companies/Government issue bonds to raise money Designed to pay a specified rate of interest at the end of a certain period of time ex. 10 year $100 bond guaranteed to pay 6%/year

11. NEFE High School Financial Planning Program Unit Three – Investing: Making Money Work for You Mutual Funds Invests in a number of different tools Could include investments in stocks, bonds, foreign stocks and others Choose due to diversification: don’t have all your money invested in one place Most retirement plans invest in mutual funds

12. NEFE High School Financial Planning Program Unit Three – Investing: Making Money Work for You Retirement Plans Types of retirement plans IRA (personal retirement plan) 401K (sponsored by company) Stock Ownership (in company employed) Profit Sharing Plan

13. NEFE High School Financial Planning Program Unit Three – Investing: Making Money Work for You Investing Annually to Achieve a Goal 3-C Value of $20 1 Year 2 Years 4 Years 6 Years 4% 5% 6% 8% 10% $20.80 $21.00 $21.20 $21.60 $22.00 $21.63 $22.05 $22.47 $23.33 $24.20 $23.40 $24.31 $25.25 $27.21 $29.28 $25.31 $26.80 $28.37 $31.74 $35.43 54321 Building….

14. NEFE High School Financial Planning Program Unit Three – Investing: Making Money Work for You Investing a $10,000 Lump Sum 3-E 11% 10% 9% 8% 7% 6% 5% 12% InterestRate5Years20Years15Years10Years $12,763 $17,623 $16,851 $16,105 $15,386 $14,693 $14,026 $13,382 $16,289 $31,058 $28,394 $25,937 $23,674 $21,589 $19,672 $17,908 $20,789 $54,736 $47,846 $41,772 $36,425 $31,722 $27,590 $23,966 $26,533 $96,463 $80,623 $67,275 $56,044 $46,610 $38,697 $32.071 1

15. NEFE High School Financial Planning Program Unit Three – Investing: Making Money Work for You Rule of 72 3-H 72 Interest Rate = Years Needed to Double Investment 72 Interest Rate Required = Years Needed to Double Investment

16. NEFE High School Financial Planning Program Unit Three – Investing: Making Money Work for You Rule of 72: $10,000 Invested 3-I 6 12 18 24 Year3%6%12% INTEREST RATE $20,000$40,000$160,000 $20,000 $40,000 $80,000 $20,000

17. NEFE High School Financial Planning Program Unit Three – Investing: Making Money Work for You Financial Planning Pyramid Penny Stock Commo- dities Collectibles Speculative Stock / Bonds / Mutual Funds Real Estate Blue-Chip Common Stock Growth Mutual Funds High-Grade Convertible Bonds High-Grade Preferred Stock Balanced Mutual Funds High-Grade Corporate Bonds or Mutual Funds High-Grade Municipal Bonds or Mutual Funds Money Market Accounts or Mutual Funds Certificates of Deposit U.S. Savings Bonds Insured Savings / Checking Accounts Treasury Issues Highest Risk Highest Earnings Lower Risk Lower Earnings 3-J NEFE High School Financial Planning Program Unit Three – Investing: Making Money Work for You

18. NEFE High School Financial Planning Program Unit Three – Investing: Making Money Work for You Interest Rate 3% 24 Yrs. $800 4% 6% 8% 12% 6 Yrs. 9 Yrs. 12 Yrs. 18 Yrs. $400 $400 $400 $200 $200 $200 $200 $200 The Impact of Higher Returns on Savings and Investments Rule of 72: The approximate frequency with which $100 doubles at specific interest rates 3-K 21