LELAND GUSTAFSON CENTER FOR ECONOMIC EDUCATION UNIVERSITY OF WEST GEORGIA

1. LELAND GUSTAFSONCENTER FOR ECONOMIC EDUCATIONUNIVERSITY OF WEST GEORGIA Investor Education Financial Fitness for Lifeand Georgia Council on Economic Education w w w . g c e e . o r g

2. Economic and Financial Literacy is Important • Citizens must understand basic economics to: • Fully participate in our nation’s market economy. • Understand policy issues and cast informed votes in federal and state elections. • Citizens must understand personal finance to: • Plan for retirement. • Make saving and investing choices. • Purchase insurance. • Buy a home.

3. Why is K-12 financial education so important? • More than ever there is a need for our citizens to have at least a basic knowledge of economics and financial management. • If people cannot make well-informed and sound personal finance decisions, how are they to make well-informed and sound public policy decisions? Georgia Council on Economic Education w w w . g e e e . o r g

4. Why is K-12 financial education so important • Americans have approximately $1 trillion in revolving credit card debt. - half make the minimum monthly payment. • Nationally, those under 25 are the fastest-growing age group filing for personal bankruptcy. Georgia Council on Economic Education w ww . g c e e . o r g

5. Time is on your side. Stock prices rise over time. Beat inflation. Overtime, investments in stock have good returns. Why Invest?

6. You can earn income. Owning stock is like a job. Rewards last a lifetime. Investing provides good assets Stocks, bonds, mutual funds Why Invest?

7. Why Invest? Own corporate America-it’s not greed. • Investing helps companies to grow and provide more jobs and income. • Investing helps create new goods and services for consumers.

8. But, It’s Scary Out There

9. Why Worry? I have all the money I’ll ever need… As long as I die at 4:00 p.m. today. Henny Youngman

10. The Problem of Economic and Financial Literacy… Georgia Council on Economic Education w w w . g c e e . o r g

11. Do You Need a Reason to Save for Retirement Georgia Council on Economic Education w w w . g c e e . o r g

12. Saving is a very fine thing. Especially when your parents do it for you.--Sir Winston Churchill Georgia Council on Economic Education w w w . g c e e . o r g

13. About 8 of 10 Americans are comfortable with the level of financial planning they are currently doing. Source: Federal Reserve Bank, St. Louis Georgia Council on Economic Education w w w . g c e e . o r g

14. 34% have not begun to prepare for retirement. 23% save nothing for long term goals. 25% do not know how much they are saving. Georgia Council on Economic Education w w w . g c e e . o r g

15. On average, Americans expect to retire at age 61 and live to 83. Georgia Council on Economic Education w w w . g c e e . o r g

16. Overall levels of economic understanding are low. (Average score of 23.85 out of 40 in recent national test.) -Jump$tart Coalition Georgia Council on Economic Education w w w . g c e e . o r g

17. Personal Bankruptcy Filings, 2009 Georgia Council on Economic Education w w w . g c e e . o r g

18. Foreclosure Rates are Way Up Georgia is 6th in the Nation Georgia Council on Economic Education w w w . g c e e . o r g

19. what are your Questions ? Georgia Council on Economic Education w w w . g c e e . o r g

20. Credit Card Use in Atlanta Source: Federal Reserve Bank, St. Louis • Average Atlanta – 3 open credit cards (down from 4 in 2007), but total balance on cards is higher • Across 20 metro areas – • Atlanta is #1 with avg balance at $6,753 • In 2007 it was $7,114 • Credit Scores in Georgia below the national average Georgia Council on Economic Education w w w . g c e e . o r g

21. Credit card companies have been marketing aggressively to young people. 11.1 % of teens have a credit card. (JA, 2005) High School Students and Credit Cards

22. College students report having an average of 4.6 credit cards. Half have four or more. Seniors graduate with more than $4,100 in credit card debt, up from $2,900 in 2004. Only 17% said they regularly paid off all the cards each month. The remaining 82% carried balances and incurred finance charges each month. 84% said they need more education on financial management topics. College Students and Credit Cards (Sallie Mae, 2009)

23. 30% of college students with loans drop out without a degree Members of the class of 2011 graduated with an average of $26,600 in student loan debt One-third of parents are more comfortable talking with their kids about smoking, drugs, and bullying than about money Bankrate.com, 2014 College Students and Loan Debt

24. Unbanked Households(Federal Reserve Bank of Chicago) About 10 million households are unbanked. Over 57% of unbanked households are minority households.

25. What Does It Mean to be “Unbanked?”

26. Where Do the Unbanked Go For Financial Services? Georgia Council on Economic Education w w w . g c e e . o r g

27. But when students have personal finance instruction they are… More likely to display positive financial behaviors and dispositions More likely to save Less likely to max out their credit cards More likely to pay off credit cards in full each month Less likely to make late credit card payments Less likely to be compulsive buyers Bankrate.com, 2014

28. So What Can We Do About All of This? Option #1

29. Option #2

30. what are your Questions ? Georgia Council on Economic Education w w w . g c e e . o r g

31. Georgia Council on Economic Education w w w . g c e e . o r g

32. S&P 500 Annual Returns Since 1954(includes reinvestment of dividends) Georgia Council on Economic Education w ww . g c e e . o r g

34. INVESTING IN THE STOCK MARKET - SINCE 1914ie,. Buying the 500 largest U.S. companies (S&P 500)

35. How to Really Be a Millionaire Georgia Council on Economic Education w w w . g c e e . o r g

36. The Millionaire Game • Most millionaires are college graduates. • True: 4 of 5 millionaires are college graduates. • 2. A majority of millionaires work fewer than 40 hours a week. • False: About 2/3 of millionaires work 45 to 55 hours a week. • 3. More than half of all millionaires never received money from a trust fund or estate. • True: Only 19 % of millionaires received any • income or wealth of any kind from a trust fund • or an estate. Georgia Council on Economic Education w w w . g c e e . o r g

37. The Millionaire Game • More millionaires have American Express Gold Cards than Sears Cards. False: Only 28.6 % on millionaires have Amex Gold Cards while 43% have Sears credit cards. • More millionaires drives Fords than Cadillacs. True: Ford is preferred by 9.4% and Cadillac by 8.8 %. Georgia Council on Economic Education w w w . g c e e . o r g

38. The Millionaire Game • 6. Most millionaires work in glamorous jobs such as sports, entertainment, or high tech. • False:A majority of millionaires are in ordinary industries and jobs. 7. Most millionaires work for big Fortune 500 companies. False: About 3 out of 4 millionaires are self employed and consider themselves to be entrepreneurs. Most of the others are professionals, such as doctors, accountants and lawyers. Georgia Council on Economic Education w ww . g c e e . o r g

39. The Millionaire Game 8. Many poor people become millionaires by winning the lottery. False: Very few people get rich the easy way. If you play the lottery, the chances of winning are about 1 in 378 million. The average person who plays the lottery every day would have to live about 761,000 years to win once. You have a 1 in 66,000 chance of being struck by lightning IN FLORIDA A pregnant woman has a 1 in 705, 000 chance of have quadruplets Georgia Council on Economic Education w ww . g c e e . o r g

40. 9. College graduates earn about 65% more than high school graduates. True: recently the average college grad earned 66% more than the average high school grad. Folks with professional degrees earned 150% more than the HS grad. 10. If an 18 year old H.S. graduate spends as much as a H.S. dropout until both are 67 years old, but the HS graduate invests the difference in his or her earnings at 8% annual interest, the high school graduate would have $5,500,000. True: This is a dramatic illustration the value of a high school education and investing early and over a long period. The difference in earnings is $8k a year at age 18 and assumes a 1.5% increase in income per year. The Millionaire Game Georgia Council on Economic Education w w w . g c e e . o r g

41. The Millionaire Game 11. Day traders usually beat the stock market and many become millionaires. False: Recent studies show that about 80% of day traders lose money. 12. If you want to be a millionaire avoid the risky stock market. False: Long term, the S&P 500 index has increased at more than 10 % annually which exceeds any other investment. Georgia Council on Economic Education w w w . g c e e . o r g

42. The Millionaire Game 13. At age 18, you decide not to smoke and save $1.50 a day……..At age 67, your savings are worth almost $300,000. True: the power of compound interest. Small and steady investments make a big difference over time. 14. If you save $2000 per year from age 22 to age 65 at 8% annual interest, your savings will be over $700,000 at age 65. True: Because of compound interest, the earlier you begin saving the better. Regular saving will make you a millionaire even if your salary is modest. Georgia Council on Economic Education w w w . g c e e . o r g

43. The Millionaire Game 15. Single people are more often millionaires than married people. False: Most millionaires are married and stay married. Financially speaking, divorce is something you want to avoid. Georgia Council on Economic Education w w w . g c e e . o r g

44. Rules for Improving Your Financial Life • Save early and often • Invest in common • stocks for the • long term (diversify) • Gather information • before making • decisions • Get married and stay • married • Get a good education • Work long, hard, and smart • Learn money-management skills • Live below your means • Buy a home (you can afford) Georgia Council on Economic Education w ww . g c e e . o r g

45. Georgia Council on Economic Education w w w . g c e e . o r g

46. The Basics Stock-An ownership share, or shares of ownership, in a corporation. Georgia Council on Economic Education w w w . g c e e . o r g

47. Can You Buy Stock in or Georgia Council on Economic Education w w w . g c e e . o r g

48. The Different Markets New York Stock Exchange The oldest stock exchange in the United States, founded in 1792 and stocks are still traded on the floor. Traditionally for large corporations with large volumes of shares. Georgia Council on Economic Education w w w . g c e e . o r g

49. NASDAQ An electronic marketplace enabling buyers and sellers to get together via computer to trade stocks. Traditionally high-tech firms that are very active. Created in 1971. Georgia Council on Economic Education w w w . g c e e . o r g

50. American Stock Exchange (AMEX) Located in New York, handles about 10% of all securities exchange. Has mostly small-cap stocks, exchange-traded funds and derivatives. Georgia Council on Economic Education w w w . g c e e . o r g