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

Learn investing terms so that you can participate in smart investing

BUILDING WEALTH IS ASSET BUILDING

Technical Culinary Artistic

Musical Mechanical Athletic

Literary Inventive Mathematical

Leadership Entrepreneurial

Fashion

Public Speaking

EDUCATION ! EXPERIENCE ! NETWORKS!

College Teams Clubs

Military Volunteer Mentors

Trade School Summer Jobs Beta/FBLA

Apprenticeships Internships Community

Online classes Travel Virtual

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

S.M.A.R.T. OBJECTIVES

Financial goals should be:S – Specific M – MeasurableA – AttainableR – RealisticT – Timeline (specific time frame)

DECISION MAKING MODEL - PACED

Define the Problem List your Alternatives State your Criteria Evaluate your alternatives Make a Decision

BASICS OF SAVING AND INVESTING – PART 1

What is the difference between saving and investing?

Five Keys to Investing Success1. Pay yourself first (make investing a habit)2. Set exciting goals3. Don’t take unnecessary risks4. Keep time on your side (time value of money)5. Diversify

Stocks Bonds Mutual Funds Savings & CDs

TIME VALUE OF MONEY

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

TIME VALUE OF MONEY (CONTINUED)

… if she continues each year …

… if he continues each year …

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

PYRAMID OF INVESTMENT RISK

High Risk

Medium Risk

LowRisk

Futures

Stocks

Bonds

Bonds

Mutual Funds

Treasury BillsMoney Market Funds

Certificates of Deposit

Savings AccountsCash

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?

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!!!

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

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)

PRACTICE THE RULE OF 72

How long would it take the following investments to double?

Investment Rate of Return Years to Double

CD 3%

Common Stock 10%

Money Market 1.7%

U.S. Treasury Note 2.66%

24

7.2

42.35

27

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

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

REVIEW

Three Rules for Building Wealth:1.Start early

Give money time to grow

2.Buy and holdKeep your money invested

3.Diversify Don’t put all your eggs in one basket

DOING IT RIGHT

MoneyTrack Video Clip – Damon Williams http://moneytrack.org/videos-2/top-stories/

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