to save or not to save securities and investments

To Save or Not to SaveSecurities and Investments

2

“Copyright and Terms of Service

Copyright © Texas Education Agency. The materials found on this website are copyrighted © and trademarked ™ as the property of the Texas Education Agency and may not be reproduced without the express written permission of the Texas Education Agency, except under the following conditions:

1) Texas public school districts, charter schools, and Education Service Centers may reproduce and use copies of the Materials and Related Materials for the districts’ and schools’ educational use without obtaining permission from the Texas Education Agency;

2) Residents of the state of Texas may reproduce and use copies of the Materials and Related Materials for individual personal use only without obtaining written permission of the Texas Education Agency;

3) Any portion reproduced must be reproduced in its entirety and remain unedited, unaltered and unchanged in any way;

4) No monetary charge can be made for the reproduced materials or any document containing them; however, a reasonable charge to cover only the cost of reproduction and distribution may be charged.Private entities or persons located in Texas that are not Texas public school districts or Texas charter schools or any entity, whether public or private, educational or non-educational, located outside the state of Texas MUST obtain written approval from the Texas Education Agency and will be required to enter into a license agreement that may involve the payment of a licensing fee or a royalty fee.

Call TEA Copyrights with any questions you have.

Copyright ©Texas Education Agency, 2013. All rights reserved.

Saving is …• A means of reaching short-term (typically one-

year or less) financial goals• Synonymous with “Pay Yourself First”

– Treating your savings as an expense by paying yourself an amount on a regular basis to go toward savings

• Easy to get to in the event of an emergency

3Copyright ©Texas Education Agency, 2013. All rights reserved.

Common Savings Instruments

Savings accounts

Certificates of deposits

(CDs)

Money market

accounts (MMAs)

4

Safe places for your money, usually short-term, lower interest rates, easily accessible (liquid)


Investing is …• not the same as “saving”• designed to meet long-term (typically longer

than one year) financial goals• more risky than a regular savings account • potential for higher returns on your money


Common Investment Instruments

6

•Riskier places to put your money (no guarantees of rates), long-term in order to see higher returns, not as easily accessible (not as liquid)

Real estate

Individual stocks

Mutual funds Corporate bonds

Government bonds

U.S. Treasury Securities-

notes and bills


Benefits to Investing

Financial security for many years

Time can be an asset.

The rate of return can be greater than the inflation

rate.

Can become a part owner of a company


SMART Goals

Specific-what you would like to achieve, i. e., a specific vacation destination

Measurable-a total amount of money to be saved for the vacation

Attainable-how the plan to achieve the goal is possible, i.e., a general breakdown of vacation expenses

Realistic-a reasonable plan or breakdown of exactly how to save the money, i.e., $50 per week for 20 weeks

Time Bound-a specific date for the goal to be accomplished, i.e., by February 1st as opposed to spring


9

SMART Goal Example

Specific-I want to save money each week by not getting coffee each morning.

Measurable-I will save $10.00 each week by giving up my coffees.

Attainable-I can save $10.00 each week , or $40.00 per month.

Realistic-I can save $10.00 each week, or $40.00 per month, for 6 months, for a total of at least $240.00.

Time Bound-I can continue this pattern of saving for an additional 6 months so I can save at least $480.00 at the end of the year that I can put toward a computer.


Simple vs. Compound Interest• Simple interest example:

– $100 x 5% (the interest rate) = $5– Compare to a snowball dropped from a high point such

as a roof. There is snow added to the snowball but it does not get any larger.

• Compound interest example:– $100 x 5% = $5 for a total of $105– Now, $105 x 5% = $5.25 for a new total of $110.25– also known as “interest on interest”– Compare to a snowball rolling down a hill. Snow

accumulates on top of the snow already in the snowball and it continues to grow.


Time Value of Money• The time value of money is the concept that

money is worth more now if it is invested than if it is invested later.

• This is because time is on your side; the earlier money is invested, it has more time to “grow”.

• The value of money now is called “Present Value” while the value of money later is called “Future Value”.


“Rule of 72” Explained• Shows how compounding can increase your

money at a more rapid rate than simple interest• A formula which calculates how long it will

take your initial investment to double• For example, here is the formula if you

anticipate a 6% interest rate:– Take 72 and divide by 6 to determine the

number of years it will take to double your investment.

– 72 / 6 = 12 years


Formal Assessments• SMART Goal Assignment #1 : Decide on a financial goal you

would like to achieve. Create a SMART goal explaining each component of the SMART acronym. Include an appropriate graphic or diagram to enhance this word-processing document.

• Basic Savings Chart Assignment #2 – Students will conduct online research to discover interest rates for at least three different types of accounts at three different financial institutions. They may create a table in a word-processing program or on a posterboard.

• Saving vs. Investing Comic Strip Assignment #3 – Students will use either an online comic strip creator program or posterboard to create a comic strip depicting a conversation among individuals where one is telling the other one the differences between saving and investing, listening to the goals of the other character, and then recommending to that character which actions to take with his or her money.


to save or not to save securities and investments

Documents