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Invest Yourself!

Invest Yourself!. An Investor Education Program for High School Students Funded by the Investor Protection Trust. Objectives for Today. Provide tools and information for you to use to make good decisions for your financial future Important concepts – self-control and delayed gratification

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Invest Yourself!

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  1. Invest Yourself! An Investor Education Program for High School Students Funded by the Investor Protection Trust

  2. Objectives for Today • Provide tools and information for you to use to make good decisions for your financial future • Important concepts – self-control and delayed gratification • Learn investing terms so that you can participate in smart investing

  3. Building Wealth is Asset Building Technical Culinary Artistic Musical Mechanical Athletic Literary Inventive Mathematical Leadership Entrepreneurial Fashion Public Speaking

  4. Education ! Experience ! Networks! • College Teams Clubs • Military Volunteer Mentors • Trade School Summer Jobs Beta/FBLA • Apprenticeships Internships Community • Online classes Travel Virtual

  5. Setting Financial Goals • It’s like reading a map … • Know where you are – Personal balance sheet • Know where you’re going – Exciting “real” goals! • Short-term goals = 2 or 3 years • Medium-term goals = 5 to 10 years • Long-term goals = More than 10 years

  6. S.M.A.R.T. Objectives Financial goals should be: • S – Specific • M – Measurable • A – Attainable • R – Realistic • T – Timeline (specific time frame)

  7. Decision Making Model - PACED • Define the Problem • List your Alternatives • State your Criteria • Evaluate your alternatives • Make a Decision

  8. Basics of Saving and Investing – Part 1 • What is the difference between saving and investing? • Five Keys to Investing Success • Pay yourself first (make investing a habit) • Set exciting goals • Don’t take unnecessary risks • Keep time on your side (time value of money) • Diversify Stocks Savings & CDs Bonds Mutual Funds

  9. Time Value of Money NOTE: Assumes a 9% fixed rate of return, compounded monthly. All interest is left in the account to be compounded.

  10. Time Value of Money (Continued) … if she continues each year …

  11. … if he continues each year …

  12. Basics of Saving and Investing – Part 2 • Market myths about investment planning • Risk and reward go hand-in-hand … • Investment products • Stocks • Bonds • Mutual funds • Retirement accounts

  13. Pyramid of Investment Risk High Risk Futures Stocks Medium Risk Mutual Funds Bonds Bonds Low Risk Treasury Bills Money Market Funds Certificates of Deposit Cash Savings Accounts

  14. Kentucky’s Blue Chip 25 • Look at your name tag – you are a stock! • Which companies do you know? • Which stocks would you like to hold?

  15. Mutual Fund Activity • Note the color on your name tag • “Fund Manager” controls the yarn in their color • “Stocks” of that color form a circle around their manager • Pass the yarn back and forth between Stock, Manager, Stock, Manager, etc. until you form a web • Stop and Hold!!!

  16. Mutual Funds • A Mutual Fund is - a pool of $$$$$ - invested by a manager -  the goal is to increase the value of each share of the fund for its investors • Why more American invest through mutual funds than directly in the stock, bond or money markets? • Professional management • Diversification “mix and match” • Liquidity • Investment objective • Always consider: Cost, Performance and Convenience

  17. Rule of 72 • Use the Rule of 72 to calculate how long it will take your money to double at a given interest rate if you reinvest the earnings • 72  Percentage rate of return = Number of years needed to double your money • Examples: • At 8% interest, it would take 9 years for the money to double (72  8 = 9) • At 10% interest, it would take 7.2 years for the money to double (72  10 = 7.2)

  18. Practice the Rule of 72 • How long would it take the following investments to double? 24 7.2 42.35 27

  19. Interest Can Work FOR You • Save $60/month for 40 years • Assume 8% interest rate • Principal Invested = $28,800 • Interest Earned = $182,058 • Final Amount Saved = $210,858

  20. Interest Can Work AGAINST You • Carry a balance of $3,000 on a credit card • Assume interest rate (APR) of 19.8% • Make minimum payment of 2% each month • Time to Pay it Off = 32 years • Interest Paid = $9,483

  21. Review Three Rules for Building Wealth: • Start early Give money time to grow • Buy and hold Keep your money invested • Diversify Don’t put all your eggs in one basket

  22. Doing It Right • MoneyTrack Video Clip – Damon Williams • http://moneytrack.org/videos-2/top-stories/

  23. Tweet! • Come up with one best tip you learned today • Create a poster displaying the tip as a “Tweet” you might see on Twitter • “Tweet” Tips: • 140 characters or less (counting spaces and punctuation) • Answers the question “What’s happening?” • Use “#” (hash tag) before words you want to mark as keywords – they become search topics/categories • Use “@” (reply or mention) with a username to recognize someone else involved with your tweet topic

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