1. 9.04 Analyze the factors that affect the rate of return on a given savings or investment plan and calculate the rate of return. H65 T009-04.01

2. Savings Plan Putting money aside in a systematic order. Ways to put money aside: –Regular deposit –Automatic deposit –Electronic funds transfer H66 T009-04.02

3. Starting a Program Factors determining a program –Safety Assurance that the money you have invested will be returned to you. –Liquidity Ease with which an investment can be changed into cash without losing any of its value. –Yield Rate of return (percentage of interest that will be added to you r savings over a period of time). –Diversification Process of spreading your assets among several different types of investments to lessen risk. H67 T009-04.03

4. Factors That Affect the Rate of Return on an Investment Risk - Chance of loss. Rate of Return (yield) –Amount of money the investment earns. –Compounding frequency is the interest computed on the amount saved plus the interest previously earned. Liquidity –Ease with which an investment can be changed into cash. Resistance to inflation –Will rate of return keep up with inflation? Tax considerations H68 T009-04.04

5. Factors that Affect the Selection of Financial Institutions Services offered H69 T009-04.05 Business hours Location On line services

6. Financial Security Investments (low risk) Cash Savings Accounts Money Market Accounts Certificate of Deposit US Government Bonds Retirement Accounts H70 T009-04.06

7. Safety and Income Investments US Treasury Securities Conservative Corporate Bonds State and Municipal Bonds Income and Utility Stocks H71 T009-04.07

8. Growth Investments Income and Growth Stocks Mutual Funds Real Estate Convertible Bonds H72 T009-04.08

9. Speculation Investments (high risk) Options Commodities Precious Metals and Gems Speculative Stocks Junk Bonds Collectibles H73 T009-04.09

10. Calculating Rate of Return Rate of Return = Total Interest Earned divide by Original Deposit Example: –If you deposited $100 in account that paid $6.18 interest for one year. What is the rate of return? –$6.18/$100 =.0618 = 6.18% H74 T009-04.10

11. 9.05 Analyze how saving and investing influences economic growth. H85 T009-05.01

12. Savings and Economic Growth Individual savings allow: –Businesses to expand and create more jobs. –Demand for goods and services to increase. Failure to save will cause less money to be invested and the economy may slow as a result. Savings contribute to our economic stability Government uses savings to build highways, schools, and public services H86 T009-05.02

13. 9.06 Describe wills and other legal documents. T009-06.01 H89

14. Wills Legal document that specifies how you want your property to be distributed after your death. Intestate –Die without a legal will –State will step in and control the distribution of your estate. Probate –Legal procedure of proving a will to be valid or invalid. H90 T009-06.02

15. Wills Simple Will –Leaves everything to your spouse Formal Will –Prepared by an attorney. Holographic Will –Handwritten will that you prepare yourself –Needs to be written, dated, and signed entirely in your own handwriting. H91 T009-06.03

16. Other Legal Documents Trusts –Legal arrangement that helps manage the assets of your estate for you benefit or that of your beneficiaries. Living Will –Document in which you state whether you want to be kept alive by artificial means if you become terminally ill and unable to make such a decision. Power of Attorney –Legal document that authorizes someone to act on your behalf. H92 T009-06.04

17. Guardian Person who accepts the responsibility of: 1. Providing children with personal care after their parents’ death 2. Managing the parents’ estate for the children until they reach a certain age H93 T009-06.05

18. 9.07 Explain how agencies regulate financial markets and protect investors. H98 T009-07.01

19. Regulators Securities and Exchange Commission (www.sec.gov) –Protect investors and maintain the integrity of the securities markets. H99 T009-07.02

20. Regulators NASD (www.nasd.com) –Registers member firms, writes rules to govern their behavior, examines them for compliance and disciplines those that fail to comply. –Largest private sector provider of financial regulatory services. –Has helped bring integrity to the markets and confidence in investors. H100 T009-07.03

21. Protecting Investors Department of the Secretary of State (www.secretary.state.nc.us /sec ) State Securities Laws –Known as “blue sky” laws –Intent of laws is to protect the investing public by requiring a satisfactory investigation of both the people who offer securities as investments and of the securities themselves. –Securities division addresses investor complaints concerning securities brokers and dealers, investment advisers and commodity dealers as well as complaints about offerings of particular investment vehicles. H101 T009-07.04