i nvest y ourself ! an investor education program for high school students funded by the investor...
TRANSCRIPT
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INVEST YOURSELF!An Investor Education Program for High School
Students
Funded by the Investor Protection Trust
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OBJECTIVES FOR TODAY
Provide tools and information for you to use to make good decisions for your financial future
Important concepts – self-control and delayed gratification
Learn investing terms so that you can participate in smart investing
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BUILDING WEALTH IS ASSET BUILDING
Technical Culinary Artistic
Musical Mechanical Athletic
Literary Inventive Mathematical
Leadership Entrepreneurial
Fashion
Public Speaking
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EDUCATION ! EXPERIENCE ! NETWORKS!
College Teams Clubs
Military Volunteer Mentors
Trade School Summer Jobs Beta/FBLA
Apprenticeships Internships Community
Online classes Travel Virtual
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SETTING FINANCIAL GOALS
It’s like reading a map … Know where you are – Personal balance sheet Know where you’re going – Exciting “real” goals!
Short-term goals = 2 or 3 years Medium-term goals = 5 to 10 years Long-term goals = More than 10 years
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S.M.A.R.T. OBJECTIVES
Financial goals should be:S – Specific M – MeasurableA – AttainableR – RealisticT – Timeline (specific time frame)
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DECISION MAKING MODEL - PACED
Define the Problem List your Alternatives State your Criteria Evaluate your alternatives Make a Decision
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BASICS OF SAVING AND INVESTING – PART 1
What is the difference between saving and investing?
Five Keys to Investing Success1. Pay yourself first (make investing a habit)2. Set exciting goals3. Don’t take unnecessary risks4. Keep time on your side (time value of money)5. Diversify
Stocks Bonds Mutual Funds Savings & CDs
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TIME VALUE OF MONEY
NOTE: Assumes a 9% fixed rate of return, compounded monthly. All interest is left in the account to be compounded.
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TIME VALUE OF MONEY (CONTINUED)
… if she continues each year …
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… if he continues each year …
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BASICS OF SAVING AND INVESTING – PART 2
Market myths about investment planning Risk and reward go hand-in-hand … Investment products
Stocks Bonds Mutual funds Retirement accounts
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PYRAMID OF INVESTMENT RISK
High Risk
Medium Risk
LowRisk
Futures
Stocks
Bonds
Bonds
Mutual Funds
Treasury BillsMoney Market Funds
Certificates of Deposit
Savings AccountsCash
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KENTUCKY’S BLUE CHIP 25
Look at your name tag – you are a stock! Which companies do you know? Which stocks would you like to hold?
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MUTUAL FUND ACTIVITY
Note the color on your name tag “Fund Manager” controls the yarn in their
color “Stocks” of that color form a circle around
their manager Pass the yarn back and forth between Stock, Manager, Stock, Manager, etc. until you form a web
Stop and Hold!!!
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MUTUAL FUNDS A Mutual Fund is - a pool of $$$$$
- invested by a manager
- the goal is to increase the value of
each share of the fund for its investors
Why more American invest through mutual funds than
directly in the stock, bond or money markets? Professional management Diversification “mix and match” Liquidity Investment objective
Always consider: Cost, Performance and Convenience
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RULE OF 72
Use the Rule of 72 to calculate how long it will take your money to double at a given interest rate if you reinvest the earnings
72 Percentage rate of return = Number of years needed to double your money
Examples: At 8% interest, it would take 9 years for the
money to double (72 8 = 9) At 10% interest, it would take 7.2 years for the
money to double (72 10 = 7.2)
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PRACTICE THE RULE OF 72
How long would it take the following investments to double?
Investment Rate of Return Years to Double
CD 3%
Common Stock 10%
Money Market 1.7%
U.S. Treasury Note 2.66%
24
7.2
42.35
27
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INTEREST CAN WORK FOR YOU
Save $60/month for 40 years
Assume 8% interest rate
Principal Invested = $28,800
Interest Earned = $182,058
Final Amount Saved = $210,858
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INTEREST CAN WORK AGAINST YOU
Carry a balance of $3,000 on a credit card
Assume interest rate (APR) of 19.8%
Make minimum payment of 2% each month
Time to Pay it Off = 32 years
Interest Paid = $9,483
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REVIEW
Three Rules for Building Wealth:1.Start early
Give money time to grow
2.Buy and holdKeep your money invested
3.Diversify Don’t put all your eggs in one basket
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DOING IT RIGHT
MoneyTrack Video Clip – Damon Williams http://moneytrack.org/videos-2/top-stories/
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TWEET!
Come up with one best tip you learned today Create a poster displaying the tip as a “Tweet” you
might see on Twitter
“Tweet” Tips: 140 characters or less (counting spaces and
punctuation) Answers the question “What’s happening?” Use “#” (hash tag) before words you want to mark as
keywords – they become search topics/categories Use “@” (reply or mention) with a username to
recognize someone else involved with your tweet topic