unit 3 - investing: making money work for you. agenda overview of unit 3- investing activity from...

Unit 3 - Investing: Unit 3 - Investing: Making Money Work for YouMaking Money Work for You

AgendaAgendaOverview of Unit 3- InvestingOverview of Unit 3- Investing

Activity from the curriculumActivity from the curriculum

Optional activities, supplementary materialsOptional activities, supplementary materials

Website suggestionsWebsite suggestions

QuestionsQuestions

Unit 3Unit 3Target CompetencyTarget Competency

Propose a personal saving and investing plan

Learning ObjectivesLearning ObjectivesA.A. Differentiate between saving and investingDifferentiate between saving and investing

B.B. Assess the time value of moneyAssess the time value of money

C.C. Compare investment optionsCompare investment options

D.D. Compare the relationship between risks Compare the relationship between risks and returns related to saving and and returns related to saving and investmentsinvestments

E.E. Recommend ways to integrate savings and Recommend ways to integrate savings and investing strategies into financial planninginvesting strategies into financial planning

3-A

Savings and InvestmentsSavings and Investments

UniqueUniqueSavingsSavingsFeaturesFeatures

UniqueUniqueInvestmentInvestment

FeaturesFeatures

CommonCommonFeaturesFeatures

What are some features common to both What are some features common to both investments and savings?investments and savings?

In Unit 3In Unit 3• Time Value of MoneyTime Value of Money

• Key Investments PrinciplesKey Investments Principles

• Saving and Investment ChoicesSaving and Investment Choices

Time Value of MoneyTime Value of Moneypage 30 Student Manualpage 30 Student Manual

CompoundingCompounding

--Albert Einstein--Albert Einstein

““Compounding is the 8Compounding is the 8thth wonder of the world” wonder of the world”

Exercise 3B: The Power of CompoundingExercise 3B: The Power of Compounding

Investing Weekly at 5% InterestInvesting Weekly at 5% Interest

3-B

Amount SavedAmount SavedPer WeekPer Week

Value AfterValue After10 Years10 Years

$ 7.00$ 7.00

$ 14.00$ 14.00

$ 21.00$ 21.00

$ 28.00$ 28.00

$ 35.00$ 35.00

$ 4,720$ 4,720

$ 9,440$ 9,440

$ 14,160$ 14,160

$ 18,880$ 18,880

$ 23,600$ 23,600

1

Rule of 72Rule of 72

3-H3-H

7272Interest RateInterest Rate

==Years Needed toYears Needed to

Double InvestmentDouble Investment

7272 Interest RateInterest RateRequiredRequired==

Years Needed toYears Needed toDouble InvestmentDouble Investment

Page 32- Student Manual

Key Investment PrincipleKey Investment PrincipleTime is moneyTime is money• More timeMore time

• More moneyMore money

• More interestMore interest

More MoneyMore Money

Page 29 of Student ManualPage 67 of the Teacher Manual

Who has the most?

Key Investment Principle Key Investment Principle DiversificationDiversification

• Don’t have all your eggs in one basket

FinancialFinancialPlanningPlanningPyramidPyramid

PennyStock

Commo- dities

CollectiblesSpeculative Stock / Bonds /Mutual Funds

RealEstate

Blue-ChipCommonStock

GrowthMutual Funds

High-GradeConvertible

Bonds

High-GradePreferred

Stock

BalancedMutual Funds

High-GradeCorporate Bondsor Mutual Funds

High-GradeMunicipal Bondsor Mutual Funds

Money MarketAccounts

or Mutual Funds

Certificatesof Deposit

U.S. SavingsBonds

Insured Savings / Checking Accounts

TreasuryIssues

Highest RiskHighest RiskHighest EarningsHighest Earnings

Lower Lower RiskRisk

Lower Lower EarningsEarnings

3-J

ActivityActivityExercise 3D: Risk vs. RewardExercise 3D: Risk vs. Reward• Page 78 Instructor ManualPage 78 Instructor Manual

• Page 34 Student ManualPage 34 Student Manual

• Page 79 Answer key Instructor ManualPage 79 Answer key Instructor Manual

An Array of Investment OptionsAn Array of Investment Options• Income InvestmentsIncome Investments

– LendersLenders

Savings at 4% vs. Investments at 7.5%

An Array of Investment OptionsAn Array of Investment Options•Growth InvestmentsGrowth Investments

–OwnershipOwnership

•StocksStocks•Real EstateReal Estate•CollectiblesCollectibles

An Array of Investment OptionsAn Array of Investment Options• Mutual FundsMutual Funds

–IncomeIncome

–GrowthGrowth

Dollar Cost AveragingDollar Cost Averaging

AmountAmountInvestedInvested

Share Price ($)

SharesPurchased

$1,000.00 $20.00 50.00

AmountAmountInvestedInvested

Share Price ($)

SharesPurchased

$100.00 $20.00 5.00

$100.00

$100.00

$100.00

$100.00

$100.00

$100.00

$100.00

$100.00

$19.50

$19.25

$19.75

$19.20

$18.90

$18.00

$18.60

$19.78

5.13

5.19

5.06

5.21

5.29

5.56

5.38

5.06

$1,000.00$1,000.00 $20.00$20.00 50.0050.00 $19.39*$19.39* 51.6651.66

$100.00 $20.90 4.78

One-Time Investment Dollar-Cost Averaging

$1,000.00$1,000.00

3-L * Average Share Price* Average Share Price4321

Optional Activities Optional Activities Instructor ManualInstructor ManualUnit 3Unit 3

SM3-1-Dollars and SenseSM3-1-Dollars and Sense

SM3-2-Are You a Risk-Taker?SM3-2-Are You a Risk-Taker?

Students talk with an adult Students talk with an adult about investment experiencesabout investment experiences

Taking It HomeTaking It Home• Students take home a newsletter ( on CD) Students take home a newsletter ( on CD)

to readto read

• Students will ask their parents what Students will ask their parents what they've learned about investingthey've learned about investing

http://hsfpp.nefe.orgStudent site

WebsitesWebsitesU.S Securities Exchange CommissionU.S Securities Exchange Commission

http://www.sec.gov/investor/teachers.shtml

www.smgww.org

www.tcalc.com/millionaire-calculator.htmlwww.tcalc.com

7%

$183.55 a month

10%

$57.72 a monthor $14.43 weekly or $2.06 a day

Assessment 3-1:Assessment 3-1: My Investing PlanMy Investing Plan

Create a personal savings and investing Create a personal savings and investing planplan