Earning and Spending. 2/3 of GDP is made up of consumer spending What are some things that you buy on a daily/weekly/monthly/yearly basis?. Wealth Accumulation. Four Factors Income : more $$ = more saving/investing Expectations : confidence in the market = more spending, fear = more saving
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2/3 of GDP is made up of consumer spending
What are some things that you buy on a daily/weekly/monthly/yearly basis?
Income: more $$ = more saving/investing
Expectations: confidence in the market = more spending, fear = more saving
Interest Rates: higher rate = incentive to save/invest
Taxes: higher taxes on investment = disincentive
• wage: hourly, by unit of production
- more blue collar
• salary: weekly/monthly/yearly
- more white collar
• rent: selling use of your property
• interest: selling use of your money
• Be REALISTIC!!!!
• Be future oriented
• Only include guaranteed income
• Needs then Wants
What types of jobs seem to pay the most?
Is a college education as necessary/worth the cost as it used to be?
For the initial investment, the report adds up tuition, fees and the opportunity cost of not working. For return, the authors use the average lifetime wage difference between college grads and those with only a high-school degree.
The associates degree has a higher rate of return than the bachelor's because of the lower cost (of course).
It really depends on what you plan to do…
Barriers to Entry
Does correlation imply causation?
• all options carry different levels of risk
• Usually: high return = high risk, low return = low risk
• APR = Annual Percentage Rate of interest on principal
• Set rate vs. Variable rate
• Inflation protected?
• Compound Interest – RULE OF 72
• Ease of conversion to cash
• Usually: high return = low liquidity, low return = high liquidity
• Paper Millionaires
Get $1000 Every Year
Invest $1000 at 8%
• College, business, car, consumer
• Home loan
• Macy’s, Kohls
• Get ready for some mail…
• Past history – timely and honest
• Salary, wages
They want paid back!!
**Min. payment = $25
Balance at Balance at
Beginning End of
$ 2,000 $ 25 $ 40 $ 2,015
2,015 25 40 2,030
2,030 25 40 2,045
2,045 25 40 2,060
2,060 25 41 2,076
**Spent $125 for $-76 worth of progress
+ $1,000 @ 5%
Me – 25 yrs. old.