1. Chapter 8: Investing and Retirement
Unit 3: Financial Planning and Insurance

2. Explore
Examine the charts, graphics, and reading excerpts in Chapter 8: Investing and Retirement.
Make a list of questions you would like to have answered as we go through the chapter.

3. Introduction WB: Before You Begin, pgs. 162-163 Journal:
Review the Learning Outcome objectives and Key Terms
Complete the “Before” column on the “Measure Your Progress” chart
Journal:
List your initial thoughts about investing.
What do you want to learn about investing?

4. Investing 101
Section 1

5. Build Wealth and Give Video 1.1 (14 minutes): Basic Rules of Investing
Journal:
As a young adult, what is the most important thing you can invest in?

6. Discussion Questions What is the Fifth Foundation?
Build wealth and give
Why is it important to complete Foundation one through four prior to investing?
Your first priorities in personal finance are to save, pay cash for large purchases, and avoid going into debt. Once you established those money foundations, you can focus on building wealth.

7. Cause and Effect Activity
Nothing is achieved without a plan.
Write down two long-term financial goals (pay for college with cash, buy my dream house, retire comfortably, etc.)
Answer the following questions for EACH goal:
Am I willing to make the financial sacrifices necessary to meet this goal?
If I don’t accomplish this goal, what are the consequences?
How much money do I need to accomplish this goal and when will I need it?

8. Basic Rules of Investing
Video 1.2 (12 minutes): Basic Rules of Investing
Journal:
If you were giving advice to a friend, what would you say are the most important things to know about investing?

9. Discussion Questions Explain what risk return ratio is.
The risk return ration is used by investors to compare the expected returns of an investment to the amount of risk they take to get the returns.
Explain what the liquidity of an asset refers to.
Liquidity refers to the availability of an asset.

10. Discussion Questions
Explain how diversification helps to protect your wealth.
Having a variety of investments will yield higher returns and lower risk.
Why does a CD have a slightly higher interest rate than a typical savings account at a bank?
Because a CD requires a longer savings commitment than a regular savings account.

11. Activity
Activity: Individual Fund Tracker (30 minutes, 15 minute weekly follow-up)

12. Types of Investment
Section 2

13. Money Markets Video 2.1 (14 minutes): Money Markets Journal:
Explain why single stocks carry a high degree of risk.

14. Discussion Questions Explain how mutual funds work.
Which carries higher risk: Money market accounts or single stocks?
Single stocks
Do bonds typically yield high or low returns?
Low
Explain how mutual funds work.
Mutual funds are made of a pool of money collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets.

15. Activity
Activity:
Reading a Prospectus (25 minutes)

16. Mutual Funds Video 2.2 (14 minutes): Mutual Funds Journal:
Which are a better investment, stocks or mutual funds? Explain your answer.

17. Discussion Questions Explain how mutual funds work.
Mutual funds are made of a pool of money collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets.

18. Discussion Questions
What is the main advantage of a mutual fund?
They give small investors access to professionally managed, diversified portfolios of stocks, bonds, and other securities.
What level of risk do mutual funds carry if well diversified?
Moderate
What is a qualified plan? Give an example of a qualified plan.
A qualified plan is a tax-favored investment. An IRA is an example of a qualified plan.

19. Activity
Activity:
Name That Investment (15 minutes)

20. Qualified Plans Video 2.3 (15 minutes): Qualified plans Journal:
What is real estate?
Why is it considered an investment?

21. Discussion Questions
What does it mean to have an investment with a “tax deferred” arrangement?
The holder is taxed at the time of distribution or withdraw.
What are some of the benefits of adding real estate to your investment portfolio?
By adding real estate, you could maintain your portfolio returns while decreasing risk.
What are some downfalls of investing in real estate?
It is expensive to buy, sell and maintain; it requires management.

22. Discussion Questions What is the stock market?
The stock market is a generic term that encompasses the trading of securities.
What is the primary difference between the American Stock Exchange and the New York Stock Exchange?
The American Stock Exchange has less stringent listing requirements than the NYSE and therefore attracts smaller companies.

23. Activity Activity: Stocks vs Mutual Funds (15 minutes)
Investments Compared (20 minutes)
Rule of 72

24. Employer Benefits and Retirement Plans
Section 3

25. Employer Benefits and Retirement Plans
Video 3.1 (13 minutes): Employer benefits and retirement plans
Journal:
Why do you think it is important to consider both salary and benefits when applying for a job?

26. Discussion Questions
What is the purpose of an employer benefits package?
To increase the financial security of staff members, and in doing so, improve worker retention across the organization.
What are the typical components of an employer benefits package?
Retirement plans, savings plans, insurance, sick leave, paid vacation, stock options, education reimbursement, and cafeteria plans.

27. Activity Activity: Funding 401(k)s and Roth IRAs (25 minutes)
Monthly Retirement Planning (25 minutes)

28. Chapter Summary Budget Builder – foundationsU.com/8
Take Action Challenge, pg. 181
Study Guide: Money in Review, pgs
Complete the “After” column on the “Measure Your Progress” chart, pg. 163.