Turbid Tuesday, November 13

Transcription

1 Turbid Tuesday, November 13 Warm up: Talk to your neighbor about what you plan to do to earn and save enough money for retirement. Talk about how old you d like to be when you retire and how much money you would like to have at retirement. Learning targets: I can give examples of the direct relationship between risk and return. I can evaluate the risk and return of a variety of savings and investment options, including: savings accounts, certificates of deposit, retirement accounts, stocks, bonds, and mutual funds.

2 MAKE ME RICH Ms. Brown Welcome to Personal Finance!

3 So where should you put your $? Think of risky vs. not-so-risky places to put your money. Pyramid of Risk

4 Savings vs. investments Savings = FDIC protected $ in banks and credit unions. Sets $$ aside for big purchases in the future as well as short-term needs. Investments = NOT FDIC insured, therefore you risk losing your $. Invest $$ not needed for emergencies or everyday expenses. For the long-term years into the future.

5 Types of savings at banks and credit unions a.savings account: - low interest (0.01 2%) - easy access to money - safe (good for short term goals / emergencies) - VERY low risk b/c of Federal Deposit Insurance

6 Types of savings at banks and credit unions b. Certificate of Deposit (CD): - slightly higher interest (1 3%) - fixed term with penalties for early withdrawal, therefore less accessible than a savings or checking account

7 Types of Investments c. Stocks: purchase of an ownership share in a company potentially high return if you sell stock for more than you bought it some stocks pay dividends (small portion of profits) to shareholders can be very risky, esp. with new companies

8 Types of Investments d. Mutual funds: collection of stocks from many companies; 401(k) or 403(b) safer than stocks from a single company can be low-risk, medium-risk or high-risk companies can be companies from a particular industry (e.g., energy companies or health-care companies)

9 Types of Investments e. Corporate Bonds: has a fixed term like a CD and pays fixed or floating interest slightly higher interest than a CD because of risk that company might not repay companies issue bonds to raise $$ for projects

10 Types of Investments f. Government bonds: Governments issue bonds to raise $$ safe because U.S. gov t has never defaulted on loans earns lower interest than corporate bonds

11 Role Play...

12 Wow, it s wet! Wednesday, November 14

13 Role Play...

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20 to print: Econ Low Down log-in sheets; PPT notes

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22 Thanksgiving Thursday, November 15

23 Credit and Credit Cards

24 Thoughts on CREDIT What is credit? Contract in which a borrower receives something of value now and agrees to repay the lender at some later date with interest. What is a credit card? A card that allows you to purchase goods and services against a pre-approved line of credit instead of paying with cash or check. Your credit card balance or a portion of the balance must be paid off each month.

25 advantages and disadvantages of credit advantages: Able to buy needed items now Don t have to carry cash Creates a record of purchases More convenient than writing checks Consolidates bills into one payment disadvantages: Interest (higher cost of items) May require additional fees Financial difficulties may arise if you lose track of how much has been spent each month Increased impulse buying may occur

26 Who s Got Credit? Credit Worthiness based on: Credit History (35%) Amounts Owed (30%) Length of Credit History (15%) New Credit (10%) Types of Credit (10%)

27 What s not in Credit? Marital status Age Salary Occupation Employment history Rental agreements

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42 Banks vs. Credit Unions Because banks have shareholders and are for-profit, they typically have higher fees for checking accounts and loans. Banks also typically pay lower interest on savings accounts and other savings options.

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44 Simple: Interest is a set amount based on your initial deposit. Compound: Interest is based on initial deposit + accumulated (added) interest

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50 Want to be a millionaire? html

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