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Essential Guide to Personal Finance: Investing in Stocks and Building Wealth

This comprehensive overview explains essential personal finance tools and strategies to achieve financial success. Learn the importance of credit scores, the value of investing early, and understand the various investment vehicles including stocks, bonds, and mutual funds. Discover key concepts such as dollar-cost averaging, risk vs. return, and the rule of 72. Gain insights from influential books and understand stock quotations, factors affecting stock prices, and professional resources available to guide your investment journey.

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Essential Guide to Personal Finance: Investing in Stocks and Building Wealth

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  1. Appendix B • Pg. 702 • “How to Invest in Stocks” • Guest Speaker • Quick overview of personal finance

  2. Tools for Success! • Knowledge- Why? Credit Score – what you don’t know CAN hurt you • Time: Two Twins – (age 22) • A. IRA @ 12%, $2,000 per year until age 28 • B. IRA @ 12%, $2,000 per year age 29-65

  3. Books • “The Wealthy Barber”, David Chilton • “The Millionaire Next Door”, Thomas Stanley and William Danko • “Rich Dad, Poor Dad”, Robert Kiyosaki • “Investing for Dummies”, Eric Tyson • And LOTS more………

  4. Investment Vehicles • Advantages and Disadvantages • Stock • Preferred Stock • Bonds • Mutual Funds

  5. Understanding Stocks • Stock Quotes (per share) • Measuring returns (include taxes and expenses) • Risk vs. return (buying on margin) • DOLLAR COST AVERAGING (per month) • RULE OF 72 (time to double investment) • Influences: economic conditions, industry, characteristics of the firm

  6. Stock Quotations • Price = Value of firm/ # of shares • 52 week price range • Symbol : Nike = NKE • Dividend • Price to Earnings Ratio (P/E) • Volume • Indexes: S&P, Dow, NASDAQ

  7. Factors effecting stock prices • Economic conditions • Market conditions • Industry • Firm • Public opinion….the “swarm” • Stock market “efficiency”

  8. Who can help!?!? • Professionals: Stock brokers, investment representative, financial planners etc. • Media: WSJ;, Money Magazine, PBS, CNN • Internet: Yahoofinance.com, bankrate.com, 1000’s of sites! • Study, personal financial plan – Fin 218. • PAY YOURSELF FIRST

  9. Next Time • Review financial section – work day • Finance Plans due next week (Thursday).

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