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Saving and Investing

Saving and Investing. Student Name:. Financial literacy– mrs. pollison. Instructions:. Save PowerPoint presentation on your P drive, Financial Literacy folder Add your name on title slide Refer to: NEFE High School Financial Planning Program student guides on desk

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Saving and Investing

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  1. Saving and Investing Student Name: Financial literacy– mrs.pollison

  2. Instructions: • Save PowerPoint presentation on your P drive, Financial Literacy folder • Add your name on title slide • Refer to: NEFE High School Financial Planning Program student guides on desk • Unit 3: Investing: Making Money Work for You, pgs 27-39 • Fill in the missing information on the PowerPoint • Print: on 3005 printer (black); handouts; 6 per page

  3. Saving and investing • Investing - • Saving -

  4. The time value of money • Definition: • Interest Formula: • **Complete Exercise 3B: The Power of Compounding, pg 30, in Student Guide, 8% only row.

  5. Show me the money!! • The power of compounding works both ways! • Procrastinating costs you compound interest and less money for your goals! • Compound interest is: • Compound interest formula:

  6. The Rule of 72 – divide 72 by the interest rate or number of years to see how long it will take to double your money. Solve the following: $100 investment, 24 years – what rate to double? $100 investment, 8% - how many years to double? $100 investment, 11 years – what rate to double? $100 investment, 7.75% - how many years to double?

  7. Risky businessAll investments involve some element of risk! • What is risk? • Risk-Reward Tradeoff – describe it! • Check out the Financial Planning Pyramid on pg 33. • List 2 low risk investments: • List 2 high risk investments: • List 3 medium risk investments: • Complete Exercise 3D: Risk versus Reward, pg34 • Who has a lower-risk investment program?_____________________ • Who has the potential for higher earnings?_____________________ • What is each person’s highest-risk investment? Carrie_______________________ Darren__________________________ • What is each person’s lowest-risk investment? Carrie________________________ Darren__________________________

  8. Income investments: (brief definition) • Savings accounts • US savings bonds • Certificates of deposit • Money market deposit accounts • Money market mutual funds • Corporate and government bonds

  9. Growth investments: (brief definition) • Stocks • Real estate • Collectibles • Mutual funds

  10. Diversification: (read only) • Reducing investment risk by putting money in several different types of investments. • “Don’t put all of your eggs in one basket.” • Spread your money around – reduce risk! • Example: mutual fund

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