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Financial Education and Training Institute Savings and Investing Linda Jekel Dir. Credit Unions Jeremy Lushene Education & Outreach Department of Financial Institutions ( www.dfi.wa.gov ) Discussion Savings and Investing Overview Why Teach Saving and Investing? Key Concepts to Introduce

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Savings and investing l.jpg

Financial Education and Training Institute

Savings and Investing

Linda JekelDir. Credit Unions

Jeremy LusheneEducation & Outreach

Department of Financial Institutions (www.dfi.wa.gov)


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Discussion

  • Savings and Investing Overview

  • Why Teach Saving and Investing?

  • Key Concepts to Introduce

  • Resources and Activity Ideas


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Key Savings Concepts

  • Pay Yourself First

  • Set Goals

  • Put Time to Work for You


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Wants And Needs

  • In order to decide how to spend and save – identify wants vs needs

  • Every age can decide what is really important, has lasting value, and how to save.


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Plug The Leak…What Want Could You CutBack On?


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Emergency Savings

  • 3-6 Months Worth of Living Expenses

  • Recession? 6 Months

  • Accounts Should Be Liquid


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Liquidity

Things to think about:

  • How Easy Is It To Get To Money?

  • Are There Penalty's?


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Compound Interest

  • Interest On Your Interest

  • Daily, Weekly, Monthly,Quarterly, Yearly


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Types of Savings

  • Savings Accounts

  • Money Market Accounts

  • Certificate of Deposits


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Traditional Savings Accounts

  • Account That Earns Interest (1.22% Avg)

  • Typically Liquid

  • Shop Around For Rates


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Money Market Accounts

  • Usually Pay Higher Interest

  • Usually Higher Minimum Balance

  • Limited # Of Withdrawals (3-6 Month)


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Certificate Of Deposits

  • Deposit A Specific Amount Of Money For A Specific Amount Of Time

  • Higher Interest Than Traditional Savings

  • Usually Penalty If You Withdraw Early


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Where Would You Store Your Money

  • For Emergency Savings?

  • Down Payment For A Car You Plan To Buy In 6 Months?

  • For A Vacation You Are Saving For?


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Keys To Savings Success

  • Pay Yourself First

  • Choose Accounts That Meet Your Goals

  • Keep Emergency Savings

  • Review Goals and Adjust As Necessary


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Why Teach Savings?

  • May Not Be Taught At Home

  • Students Have Ambitious Goals

  • Time Is On Their Side

  • Disposable Income

  • Help Develop Lifelong Habit



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The 5 Concepts…

  • Wants vs Needs

  • Emergencies Happen

  • Goals Can Be Achieved (Budget)

  • Time Is On Their Side (Compound)

  • Pay Self First


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How To Grab Students Attention About Saving

Show Them That Time Is Ticking





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Spending Leaks

Jeremy’s Daily Leaks At Age 17

Non-fat Vanilla Latte ($4)

3 Otis-Spunkmeyer Cookies ($1)

Dr. Pepper ($1)

Gas for multiple trips to friends ($3)

Total ($9)


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That’s $1,620 For TheSchool Year!


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Mac Book

Roth IRA

Textbooks

Vacation


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What’s It Take To BeA Millionaire?



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Curriculum

  • Money Savvy Kids (K-12)

  • Moonjar (K-5)

  • FEPPP (www.feppp.org)

  • Right on the Money


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Organizations

  • Local Bank or Credit Union

  • Jump$tart

  • Junior Achievement

  • FEPPP



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What Would You CutIf You Made Only $18,000 A Year?


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$18,000 A Year

  • $1,200 (month social security)

  • Plus 4% of a $100,000 401K

  • Retirement isn’t cheap!


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Secrets To Investing Success

  • Know What You Are Investing For

  • Stay The Course (Real Loss)

  • Review Your Portfolio – Adjust To Goals

  • Know Your Risk Tolerance


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Types of Investments

  • Stocks

  • Mutual Funds

  • Bonds


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Stocks

  • Partial Ownership In A Company

  • Sold On Stock Market

  • Dividends

  • Stocks Carry Risk

  • Never Put All Eggs In One Basket

    • Diversification


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Bonds

  • Loaning Money To Company Or Govt. (IOU)

  • Money Is Repaid + Interest

  • Many Types Of Bonds Exist

    • Short Term, Long Term, Govt.

  • If Held Through Maturity, Investor Receives Face Value Of Bond.

  • Generally, Less Risky Than Stocks


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Mutual Funds

  • Professionally Managed Pools Of Money

  • Many Investors

  • Contain Various Types Of Investments

  • Instant Diversification

  • Ask For Prospectus

    • Contains Fund Objectives

  • Most Require Minimum Investment

    • Some As Low As $250


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What Would You Do?

You’re 25. You have an extra $5,000 to invest.

Would you choose a stock with high risk, medium risk, low risk?

Why?


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Risk vs Return

  • What You Need To Know:

    • All Investments Have Some Degree Of Risk

      • Interest Rate Risk

      • Inflation

      • Business Failure


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Diversification

  • Never a good idea to keep all eggs in one basket.

  • Work with a financial planner to keep your investments diversified.



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Investment Risk

  • See quiz handout

  • Choose a partner & answer questions 1 & 3

  • Decide what level of risk (low, moderate, or high)

  • Decide what level of time (short, moderate, or long)



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Protect Yourself

  • Read Prospectus Carefully

  • Make Sure Investments Are Registered

    • www.dfi.wa.gov or www.finra.org

  • Make Sure Professional Is Licensed

  • Stay Up To Speed On Common Scams


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Concepts Students Should Understand

  • Again… Time Is On Their Side

  • Goals Are Achievable With A Plan

  • Diversification

  • Risk Tolerance




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Resources

  • Investor Education 2020

  • Investor Edu. In Your Community

  • Kiplinger Booklets

  • NASAA/DFI


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Resources Continued

  • FINRA

  • Stock Market Game

  • Money Track Videos

  • Fraud Scene Investigator


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Jeremy Lushene

Education and Outreach

Phone: (360) 902-0506

Email: [email protected]

Linda Jekel

Director of Credit Unions

Phone: (360) 902-8778

Email: [email protected]

Contact Us!

Web Sitewww.dfi.wa.gov/financial-education/


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