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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

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Financial Education and Training Institute

Savings and Investing

Linda JekelDir. Credit Unions

Jeremy LusheneEducation & Outreach

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


Discussion

  • Savings and Investing Overview

  • Why Teach Saving and Investing?

  • Key Concepts to Introduce

  • Resources and Activity Ideas


Key Savings Concepts

  • Pay Yourself First

  • Set Goals

  • Put Time to Work for You


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.


Plug The Leak…What Want Could You CutBack On?


Emergency Savings

  • 3-6 Months Worth of Living Expenses

  • Recession? 6 Months

  • Accounts Should Be Liquid


Liquidity

Things to think about:

  • How Easy Is It To Get To Money?

  • Are There Penalty's?


Compound Interest

  • Interest On Your Interest

  • Daily, Weekly, Monthly,Quarterly, Yearly


Types of Savings

  • Savings Accounts

  • Money Market Accounts

  • Certificate of Deposits


Traditional Savings Accounts

  • Account That Earns Interest (1.22% Avg)

  • Typically Liquid

  • Shop Around For Rates


Money Market Accounts

  • Usually Pay Higher Interest

  • Usually Higher Minimum Balance

  • Limited # Of Withdrawals (3-6 Month)


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


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?


Keys To Savings Success

  • Pay Yourself First

  • Choose Accounts That Meet Your Goals

  • Keep Emergency Savings

  • Review Goals and Adjust As Necessary


Why Teach Savings?

  • May Not Be Taught At Home

  • Students Have Ambitious Goals

  • Time Is On Their Side

  • Disposable Income

  • Help Develop Lifelong Habit


5 Savings Concepts Students Should Understand


The 5 Concepts…

  • Wants vs Needs

  • Emergencies Happen

  • Goals Can Be Achieved (Budget)

  • Time Is On Their Side (Compound)

  • Pay Self First


How To Grab Students Attention About Saving

Show Them That Time Is Ticking


Time Value of Money


How To Grab Their Attention…


How To Grab Their Attention…

Spending Leaks


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)


That’s $1,620 For TheSchool Year!


Mac Book

Roth IRA

Textbooks

Vacation


What’s It Take To BeA Millionaire?


Resources for the Classroom


Curriculum

  • Money Savvy Kids (K-12)

  • Moonjar (K-5)

  • FEPPP (www.feppp.org)

  • Right on the Money


Organizations

  • Local Bank or Credit Union

  • Jump$tart

  • Junior Achievement

  • FEPPP


Investing


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


$18,000 A Year

  • $1,200 (month social security)

  • Plus 4% of a $100,000 401K

  • Retirement isn’t cheap!


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


Types of Investments

  • Stocks

  • Mutual Funds

  • Bonds


Stocks

  • Partial Ownership In A Company

  • Sold On Stock Market

  • Dividends

  • Stocks Carry Risk

  • Never Put All Eggs In One Basket

    • Diversification


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


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


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?


Risk vs Return

  • What You Need To Know:

    • All Investments Have Some Degree Of Risk

      • Interest Rate Risk

      • Inflation

      • Business Failure


Diversification

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

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


Pyramid Group Activity


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)


Raise Your Hand If…


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


Concepts Students Should Understand

  • Again… Time Is On Their Side

  • Goals Are Achievable With A Plan

  • Diversification

  • Risk Tolerance


How To Grab Their Attention


How To Grab Their Attention


Resources

  • Investor Education 2020

  • Investor Edu. In Your Community

  • Kiplinger Booklets

  • NASAA/DFI


Resources Continued

  • FINRA

  • Stock Market Game

  • Money Track Videos

  • Fraud Scene Investigator


Jeremy Lushene

Education and Outreach

Phone: (360) 902-0506

Email: jlushene@dfi.wa.gov

Linda Jekel

Director of Credit Unions

Phone: (360) 902-8778

Email: LJekel@dfi.wa.gov

Contact Us!

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


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