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Building Savings Investment Options. Objectives. Explain the Difference Between Saving and Investing Identify Types of Investments. Investments. Saving money is setting aside money for future use. Investing money is the use of money to make more money. Investments.

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Building Savings Investment Options

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Building savings investment options

Building Savings

Investment Options


Objectives

Objectives

  • Explain the Difference Between Saving and Investing

  • Identify Types of Investments


Investments

Investments

  • Saving money is setting aside money for future use.

  • Investing money is the use of money to make more money.


Investments1

Investments

  • A financial option that you purchase for future income or financial benefit. It is important because it provides retirement options and financial security.

    Examples:

    StocksReal Estate

    BondsRetirement Plans

    Mutual Funds


Investments2

Investments

  • Investments are different than savings accounts.

  • There is often a greater risk of losing your money in an investment because it is not backed by the FDIC.

  • The greater the risk, the greater the expected return on investment.


Investments3

Investments

How do you make money from investments?

  • Selling Your Investment

  • Earning Dividends


Stocks

Stocks

A security that represents ownership in a corporation. If you own stock, you own a piece or "share" of that company.

  • Periodic dividends

  • Sell the stock

    Prices of stock vary greatly.


Bonds

Bonds

A certificate which is evidence of a debt on which the issuer (corporations and federal, provincial and municipal governments) promises to pay the holder a specified amount of interest for a specified length of time, and to repay the loan on its maturity.

  • Wide variety of purchase amount options.

  • Wide variety in maturity lenghts.


Mutual funds

Mutual Funds

A professionally-managed collection of money that an investment company invests in stocks, bonds and other products. These funds offer the advantages of diversification and professional management.

  • Higher return than savings accounts.

  • Lower return than stocks and bonds.

  • Less risk due to diversification.


Other investments

Other Investments

What do you think will be the biggest investment many of you will make in your lifetime?

  • Homeownership

  • Retirement Investments

    • 401(K) or 403(b) Accounts

    • Roth Accounts or Roth IRA Accounts

    • Social Security


Retirement investments

Retirement Investments

  • 401(K) Accounts

  • Roth IRA Accounts

  • Social Security


What is right for you

What is Right for You?

  • How do you feel about risk?

  • How much money do you want to have?

  • How long can you invest before using the money?


Investment considerations

Investment Considerations

  • If you think you might need access to your money right away, it might be best for you to keep it in savings account where you have immediate access.


Investment considerations1

Investment Considerations

  • If you are not comfortable with risk and cannot afford to lose the money, take less risk by depositing money in an insured financial institution. Shop around for the account that best meets your needs.


Investment considerations2

Investment Considerations

  • If you have some money you won’t need for several years, you might consider different investment options such as stocks, bonds or mutual funds.


Summary

Summary

  • Explained the Differences Between Savings and Investments

  • Identified Types of Investments


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