ch. 8 & 9 intro video how money is made. bell ringer 4/7 what was the most exciting thing you...
TRANSCRIPT
SAVINGS & INVESTING
Saving- 10% of paycheck each month
• Saving is a trade-off• You trade spending NOW for the ability to
spend in the future.• Purpose of savings is to cover future
expenses whether or not you can see them coming.• Unexpected expenses
• Car repairs, unemployment, illness, house repairs, etc.
Ways to Save...
• Savings Account at a bank (earn interest)• Certificate of Deposit (CD)
• Earns a fixed interest for a specific period of time
• You cannot touch the money once you put it in a CD until the maturity date
• Ranges from few days to several years• Savings Bond
• Sold in amounts of $50- $10,000
Savings Vs. Investing
• Savings= socking away money
• Investing= using your savings to earn more money
• Why invest?1. Strengthen financial position over time2. Provides a source of income in addition to
paycheck
Investing
• A way to save• Investing is a way to also earn income
• Risk- A chance that an investment will decrease in value• All investments involve some form of risk
• Return- Income you earn on an investment
Types of investments
• Stocks• Bonds• Mutual Funds• Money Market Accounts• Real Estate• Collectables
Stocks
• Partial ownership of a company
• Companies sell stock to raise funds
• Common way of investing
Stock Market Basics
Stock: ownership interest in a corporation
Shares: individual units of ownership, available for purchase
Shareholder: investors who purchase shares of stock; part owners
Stockbroker: A person who handles the transfer of stocks and bonds between buyer and seller
How are stocks traded?
Central location where stocks are sold on a trading floor.
Wall Street- Manhattan; home of oldest stock exchangeNYSE
500 most widely held companies(70% diversification)S&P 500
OTC Stock: over the counter, where they are traded by phone & computerNASDAQ
Stock Exchange
Tracking the Stock Market:
Dow Jones
• Tracks 30 stocks of large, well known companies
• Called BLUE CHIP STOCKS!
NASDAQ
• Tracks more than 5,000 domestic stocks
Standard & Poor's 500
• Measures average performance of 500 stocks
• Industrial, transportation, financial, & utility
TraBLUE CHIP STOCKS!video
Tracks more than 5,000 domestic stocks
Dow Jones Industrial Average1. Alcoa Inc.2. American Express3. AT&T4. Bank of America5. Boeing 6. Caterpillar7. Chevron8. Cisco Systems9. Coca-Cola10. DuPont11. Exxon Corp.12. General Electric13. Hewlett Packard14. Home Depot15. Intel16. IBM
17. Johnson & Johnson18. J.P. Morgan/Chase19. Kraft20. McDonald’s Corp.21. Merck & Co.22. Microsoft23. 3M24. Pfizer25. Procter & Gamble26. The Traveler’s Companies27. United Technologies Corp.28. Verizon29. Wal-mart30. Walt Disney Co.
Ticker Symbols• 1 to 5 letter symbols used to
identify companies being traded
• NYSE: 3 letters or less• NASDAQ: 4 letters
APPL – ANF – CMG – GOOG –
• Ticker Symbol Worksheet
Diversification
• Spreading your risk among many different types of investment.• Example- Investing in some blue chip
stocks as well as some more risky stocks.
• Why would this be a smart way to invest?
Bull vs. Bear Market:
The UPS and DOWNS of Stocks
Capital Gains• Sell stock for more than you paid for it.• Example…bought 100 shares of Apple @ $80
share (total investment of $8,000). Later sold 100 shares @ $200 share ($12,000 gain).
Capital Loss• Sell stock for less than you paid for it.• Example... You bought 100 shares of Apple @ $80
a share (total investment of $8,000). Later sold 100 shares @ $60 a share ($6,000). $2,000 loss.
Stock Information
• Volume• Total shares of stock traded on the most
recent trading day.
• 52 week range• High- highest price for a stock during the
yr.• Low- Lowest price for a stock during the
yr.
Stock Information
• Change• Dollar difference between the preceding
days closing price and the most recent price.
• Percent Change• % difference between the preceding days
closing price and the current price.• Open
• Price paid in a stock’s first transaction of the current trading day.
Mutual Funds
• Pools the money of many investors and buys a large section of securities that meet the funds stated investment goal.
• Allow investors to spread out their risk among many different companies
Mutual Funds
• Example: Say you have $500 to invest but do not know which stock or bonds to buy, when to buy them, or when to sell them.
• You can buy shares in a large, professionally managed group of investments called mutual funds.
Mutual Fund ExampleReynolds Blue Chip Growth Fund
Company Symbol % AssetsYTD
Return %
Apple Inc. AAPL 3.48 121.15Google
Inc.GOOG 1.45 74.64
OFFICEMAX INC.
OMX 1.42 51.96
COTT CP COT 1.07 596.88Research In Motion Limited
RIMM 1.07 46.90
Starbucks Corporatio
nSBUX 0.97 105.29
OFFICE DEPOT INC
ODP 0.95 92.95
Baidu, Inc. BIDU 0.94 193.36LAS
VEGAS SANDS CORP
LVS 0.88 155.31
INTL PAPER
IP 0.81 97.80
Third Rock From The Sun
3rd Rock From The Sun- Stock Market
Researching Stocks Activity
• http://finance.yahoo.com• Chipotle Example• Pick a company you want to research• Follow the instructions on the
worksheet