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How Investing Works START INVESTING NOW TO REAP THE BENEFITS
It costs how much? I remember when ____ used to cost only $____. 2©2012 National Endowment for Financial Education | Lesson 4-2: How Investing Works
Preview Today we will answer these questions: When should I start investing? What are some guidelines to follow when investing? How do I buy stock? Use what you learn today to make decisions about stock investments. 3©2012 National Endowment for Financial Education | Lesson 4-2: How Investing Works
Inflation 4©2012 National Endowment for Financial Education | Lesson 4-2: How Investing Works
Time Value of Money (TMV) Yesterday’s T oday’s Tomorrow’s 5©2012 National Endowment for Financial Education | Lesson 4-2: How Investing Works
Pay Raise for Whitney Whitney currently earns $7.25 an hour working part time. During her performance review meeting her supervisor informed her that she has earned a $.50 increase in hourly pay. Is Whitney’s wage increase enough to keep up with inflation? What is the minimum increase per hour she needs to at least match the average annual rate of inflation at three percent? ©2012 National Endowment for Financial Education | Lesson 4-2: How Investing Works6
Pay Raise for Derrick Justin’s older brother, Derrick, now earns an annual salary of $28,080. He wants to ask about a raise at his next performance review. What is the minimum amount of salary increase Derrick should request to keep up with the average annual rate of inflation? ©2012 National Endowment for Financial Education | Lesson 4-2: How Investing Works7
Invest Now or Later? Which is better? A. Start investing a little now. B. Wait a while to invest more later. 8©2012 National Endowment for Financial Education | Lesson 4-2: How Investing Works
Reasons to Invest An income investment provides expected earnings, usually in predictable amounts. Earned interest – payment received in return for use of your money Dividends – share of profits some companies pay to their stockholders Rent payments – received from people or companies in return for using your property Growth investments are purchased because of the potential that the value will increase over time; an unpredictable amount of money is received when the investment is sold. Real estate Business Crops Precious metals ©2012 National Endowment for Financial Education | Lesson 4-2: How Investing Works9
Stock Talk Businesses sell shares of stock to raise money to run the business. Someone who buys stock owns a portion of a business, depending upon how many shares are bought. A shareholder doesn’t take on responsibilities of running the company, but a company employee might happen to be a shareholder. A shareholder is allowed one vote per share when electing board members at shareholder meetings. Company management might decide to share part of the profits by paying dividends to shareholders (cash or shares of stock). The price of stock shares varies based on what people are willing to pay. Each stock has a unique ticker symbol (abbreviated name for lists). 10©2012 National Endowment for Financial Education | Lesson 4-2: How Investing Works Guess the name of these four companies: GE NFLX F DPS
How to Buy Stock 11©2012 National Endowment for Financial Education | Lesson 4-2: How Investing Works Select Broker Deposit Cash to open a brokerage account Decide what you want to buy (or sell) Place bid (or ask ) order with broker to buy (or sell) quantity at a certain price. Place order for broker to complete trade through an exchange Pay transaction fee to broker at time of buy (or sell) Pay attention to stock news and price Keep record of buy (or sell) for tax reporting
Pick a Stock to Study 12©2012 National Endowment for Financial Education | Lesson 4-2: How Investing Works What do you like? Buy? Use? What products and industries are familiar to you? What do consumers need and use? What are industry trends?
Stock Study Do your own homework. Know what you are buying. Study company data and news to answer these questions: – What is the current “state of affairs”? – Are there any “red flags” that indicate the company has issues? – Does the company have a record of consistent growth? (earnings per share, revenue, dividends) – Is the company making money? – Can the company cover its debt? – How does the company compare with competitors? – How does the company compare with industry trends? – How does the current price compare with recent trends? Disclaimer: The basic guidelines offered here are presented to help get you started on your own stock study and do not guarantee positive results. You are encouraged to continually learn more about investing and seek professional guidance as you engage in investing decisions. 13©2012 National Endowment for Financial Education | Lesson 4-2: How Investing Works
Challenge Write an article or news report script to help middle school students learn about the value of saving and investing. Include a Top 5 list of tips for saving and investing. 14©2012 National Endowment for Financial Education | Lesson 4-2: How Investing Works
5/22/15 BR: BASED ON THE TIME VALUE OF MONEY, EXPLAIN WHY IT MIGHT BE BETTER TO BEGIN INVESTING EARLY RATHER THAN LATER. ©2012 National Endowment for.
How Investing Works START INVESTING NOW TO REAP THE BENEFITS.
How Investing Works START INVESTING NOW TO REAP THE BENEFITS ©2014 National Endowment for Financial Education | Lesson 4-2: How Investing Works 1.
5/21/15 BR: WHEN INVESTING MONEY WOULD YOU RATHER HAVE COMPOUND OR SIMPLE INTEREST? EXPLAIN YOUR ANSWER.
Back to Table of Contents pp Chapter 31 Investing in Stocks.
Chapter 31 Investing in Stocks pp Learning Objectives After completing this chapter, you’ll be able to: 1.Define 1.Define stock. 2.Explain.
Investing In Stocks Chapter 31. Today’s Schedule Tuesday’s Quiz Review Tuesday’s Quiz Review Assignment of Homework Assignment of Homework Chapter 31.
In this Unit We Will: Know the difference between saving and investing Be familiar with the time value of money Be able to compare investment options.
Planning to use your money for the future Making Money with Money Risk is going to be involved Higher Risk=Higher Rate of Return (or Loss)!
© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 19 SLIDE Saving and Investment Planning Stock.
Economics Chapter 9. Section 1 Objectives 1.What benefits do people gain by saving money? 2.How do savings accounts differ from time deposits? 3.How.
ALL ABOUT STOCKS Today’s Learning Targets: Students will be able to understand common terminology associated with the stock investments. Students will.
9.02 Summarize the investing in stocks and bonds. T H17.
To play, start slide show and click on circle Yellow OrangeGreenPurplePink
Investing Chapter 9. Investing Risk The chance that an investment will decrease in value Return The income you earn on an investment RATE OF RETURN.
How the Stock Market Works. Stock A share in ownership of a company. A share in ownership of a company. Someone who owns stock in a company owns a part.
S LIDE 1.1 The Language of Financial Markets Quiz Bowl Game Board Invest in This Potent Investments Index or Exchange Earn It Who am I? Financial Markets.
Chapter 32 Saving and Investing Introduction to Business Spring 2005.
G1 Introduction to Investing Financial Literacy.
Copyright © 2011 Pearson Education, Inc. Managing Your Money.
G1 Introduction to Investing "Take Charge of Your Finances" Advanced Level.
Investing in Stock Chapter 12 Personal Finance Characteristics of Stocks Common Stock – A type of stock that pays a variable dividend and gives.
Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 19 1 CHAPTER Saving and investment planning Stock investments.
Chapter 6 Saving & Investing. Deciding to Save There are many reasons to save: for purchases that require more funds than you usually have at one time.
Objective the objective is – to learn and understand basic investing principles and how the stock market works – current events, – the basics of how the.
Put Savings to Work SELECT SAVINGS OPTIONS THAT WORK FOR YOU.
Banking, Saving and Investing Using Money to Make Money.
The Stock Market 3.1 STOCK MARKET BASICS. Objectives.
Before You Invest. For the purpose of personal finance corporations are either private or public. Private corporations are owned by individuals, families,
Forms of Business Ownership ~ The Corporation ~ & ~ The Stock Market ~
Introduction to Stock Market. Common Vocabulary Common Vocabulary Stock Exchange – Place where publicly held companies are bought and sold Nasdaq – an.
Preferred Stock Common Stock Stockbroker Stock Exchange Market Value.
Saving and Investing Chapter 6. Deciding to Save Benefits of Saving: (6 months of housing) – Make large purchases without paying interest – Funds for.
Carl Johnson Financial Literacy Jenks High School Preparing for a Savings or Investment Program.
Economics. October 24, 1929 Black Thursday Stock Investment that shows ownership.
Pre-Algebra 8.6 and 8.7 Applications of Percents.
+ Business Organizations Chapter 3. + Sole Proprietorships The most common form of business organization in the US is the sole proprietorship. This is.
MORE FACTS ABOUT INVESTING PERSONAL FINANCE. EMERGENCY FUNDS An ___________account needs to have a high degree of _______ and __________. High safety.
Types of Investments Types of Investment Tools StocksBonds Mutual Funds Real Estate Speculative Investments.
Do Now If you didn’t finish your study guide on Friday, come up and get it. Finish answering the questions. We will correct them in a few minutes.
SAVING AND INVESTMENT CHOICES Savings plans Savings account Certificate of deposit Money market account Securities Stock investments Bond.
Stock Market Game Current Events. Introduction to Stock Market Common Vocabulary Common Vocabulary Stock Exchange – Place where publicly held companies.
Investment Vocabulary. Stock Market A market in which the public trades stock that someone already owns; the buying and selling of stock.
Investing Continued. A stock is a share of a stock It entitles the buyer to a certain part of the future profits and assets of a corporation selling.
Stocks Chapter 9. Common and Preferred Stock 9.1 Objectives – How to identify the reasons for investing in common stock – How to identify the reasons.
Stock Market general term to describe all stock transactions.
Saving and Investing Where Should You Put Your Money?
Investment Options Part 1. Three reasons to invest Investing helps beat inflation Investing increases wealth Investing is fun and challenging –Opportunity.
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