Investing & SavingsConsumer EdUnit 9

Money Options

• Save

• Spend

• Invest

• Give Away

Reasons for Saving

• Rainy Days 3-6 months worth of income

• Major Purchases House, Care, items, College

• Retirement Money to live on after no longer working

Saving Investments

Savings Accounts

CD’s

Money Market Accounts

Bonds

Savings Account Types

• Basic -18 years old control until then parents have authority• Low interest rates, very safe

• CD’s -minimum required, must be held for certain time frames• Higher returns

• Money Markets-minimum required, higher interest rates• Can use at minimal times

Interest

• Compound-keeps adding on top of interest

• Simple-straight interest added on for one time

Investing

• Short Term vs. Long Term

• Liquidity-able to change into cash quickly

• Risk –what you are willing to gamble onvs.

• Return-what you will get back on your money that you invested

Reasons to Invest

• Reach Financial Goals

• Live on investments without working

• To increase monetary values

• For unexpected occurrences

Corporate Stocks

def. is a share of ownership of a company

Stock is created for money needed to run the business**Ex: 100 shares of McDonald’s stock purchased for

$2250 in 1965 on 1st offering-is worth more than $1.4 million in 1995.

Stock Market Venues• NYSE-New York Stock Exchange-major corporations are traded

here on Wall Street

• NASDAQ-Is where firms are listed electronically are sold –small companies use this

• General Public cannot buy stocks at these two places

Stock Purchasing• Stock Broker-is who handles the buying and selling of stock for

you

• Types of Stock• Common-basic stock no dividends are paid• Preferred-pays a dividend is paid

Stock Investment• Pro• Dividends• Only out the money

you paid for stock• Huge potential for

gains

• Con• Can lose• Not a guarantee• Hard to purchase• Hard to decide on

which ones to purchase

Mutual Fund• def. a group that manages numerous amounts of money

under one heading that is chosen and monitored by the fund manager (broker)

• Combination of stocks and bonds• 401K programs use this option• Are broken into groups-by risk, types, and location

Mutual Funds• Pros• Can diversify your

money easily• Tax Advantage

• Cons• Must have a

minimum of $1000 to invest• Load-a fee to be a

part of the fund

Retirement Plans• Are incomes that are used after retirement• Pension-funded by company• 401 K Plans-funded by you and company• IRA-personally funded before payroll taxes• Roth IRA-personally funded after payroll taxes

Real Estate• Values in real estate fluctuate; location is key, timeframe to

hold on to property• Item of value can own and then sell, can use for rental

income, can live in•

Collectables• Art, collectables, • must know market and be prepared to hold for perfect

moment to sell

Investing Strategies

• Diversification-spread out your money in different areas

• Know your limits-on risk and return

• Only invest what you can bear to lose

• Stay current on financial trends