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Student Name:

INSTRUCTIONS:

Save PowerPoint presentation on your P drive, Financial Literacy folder

Add your name on title slide

Refer to: NEFE High School Financial Planning Program student guides on desk

Unit 3: Investing: Making Money Work for You, pgs 27-39

Fill in the missing information on the PowerPoint

Print: on 3005 printer (black); handouts; 6 per page

Saving - Investing -

SAVING AND INVESTING

THE TIME VALUE OF MONEY

Definition:

Interest Formula:

**Complete Exercise 3B: The Power of Compounding, pg 30, in Student Guide, 8% only row.

8%

Compound interest is:

Compound interest formula:

The power of compounding works both ways!

Procrastinating costs you compound interest and less money for your goals!

SHOW ME THE MONEY!!

THE RULE OF 72 – DIVIDE 72 BY THE INTEREST RATE OR NUMBER OF YEARS TO SEE HOW LONG IT WILL TAKE TO DOUBLE YOUR MONEY.

Solve the following:$100 investment, 24 years – what rate to double?

$100 investment, 8% - how many years to double?

$100 investment, 11 years – what rate to double?

$100 investment, 7.75% - how many years to double?

RISKY BUSINESSAll investments involve some element of risk!

What is risk?

Risk-Reward Tradeoff – describe it!

Check out the Financial Planning Pyramid on pg 33.

• List 2 low risk investments:

• List 2 high risk investments:

• List 3 medium risk investments:

Complete Exercise 3D: Risk versus Reward, pg 34

Who has a lower-risk investment program?_____________________

Who has the potential for higher earnings?_____________________

What is each person’s highest-risk investment? Carrie_______________________ Darren__________________________

What is each person’s lowest-risk investment? Carrie________________________ Darren__________________________

INCOME INVESTMENTS: (BRIEF DEFINITION)

Savings accounts

US savings bonds

Certificates of deposit

Money market deposit accounts

Money market mutual funds

Corporate and government bonds

GROWTH INVESTMENTS: (BRIEF DEFINITION)

Stocks

Real estate

Collectibles

Mutual funds

DIVERSIFICATION: (READ ONLY)

Reducing investment risk by putting money in several different types of investments.

“Don’t put all of your eggs in one basket.”

Spread your money around – reduce risk!

Example: mutual fund