2.  Take out 3 SMALL pieces of scratch paper and write your name on each.  How will you distribute your money?  Low Risk, Medium Risk, High Risk Ms. Seguin

3. Fill out the first 2 columns of your KWL sheet. What do you KNOW?  What do you WANT to know?

4. It can buy a House, but not a Home- It can buy a Bed, but not Sleep- It can buy a Clock, but not Time- It can buy you a Book, but not Knowledge- It can buy you Position, but not Respect- It can buy you Medicine, but not Health- It can buy you Blood, but not Life- It can buy you Sex, but not Love- So you see, money isn’t everything And it often causes pain and suffering. I tell you this because I am your Teacher, And as your teacher I want to take away all your pain and suffering. So give me all your money and I will suffer for you. Cash only please. Source Unknown

5. 1. ____% of teenagers pay themselves first when they receive an allowance or get paid for work. 2. ____% of teenagers usually put savings into a checking or savings account, while _____% put savings into a certificate of deposit, mutual fund or stock. 3. ____% of teenagers have sought advice (usually from a parent) on how or where to best save or invest their money. 4. Of all young people who are familiar with investing in the stock market, ____% of teenagers are guys and _____% are teenage girls. 5. ____% of teenagers are savings money for college, and ____ % are saving for a car.

6.  How can you develop the habit of saving?  What is the difference between saving and investing?  What does time value of money mean, and why is it such a neat thing for one to know now?  What is a quick way to find out how long it will take your money to double?  What is the difference between a stock and a bond?  How do mutual funds work? Do you have any more to add?

7.  How can you make your money work for you?  Where does the money come from?  Two significant ways: savings and investments.  Are they the same?

8.  Money set aside for a short-term goals.  Money in savings may be invested later.  Usually very safe  Earns a small amount of interest.  Can pull money out at any time (liquid).

9.  Money set aside for future income, benefit, or profit to meet LONG-TERM goals  No guarantee money will grow or increase.  Potentially huge earnings or losses.  Investor recognizes it usually takes a LONG TIME to earn big bucks – in it for the LONG HAUL.

10.  Imagine there is a bank which credits your account each morning with $86,400, carries over no balance from day to day, allows you to keep no cash balance, and every evening cancels whatever part of the amount you had failed to use during the day.  What would you do?

11. There is a bank like this – YOU.  Every morning, it credits you with 86,400 seconds. Every night it writes off, as lost, whatever of this you have failed to invest to good purpose. It carries over no balance. It allows no overdraft.

12.  Each day it opens a new account for you. Each night it burns the records of the day. If you fail to use the day's deposits, the loss is yours. There is no going back. There is no drawing against the tomorrow. You must live in the present on today's deposits. Invest it so as to get from it the utmost in health, happiness and success! The clock is running. Make the most of today. What you do with this time… determines your success.

13.  As you read/listen to the following poem, think about what TIME means to you.

14. To realize the value of ONE YEAR, ask a student who failed a grade. To realize the value of ONE MONTH, ask a mother who gave birth to a premature baby. To realize the value of ONE WEEK, ask the editor of a weekly newspaper. To realize the value of ONE HOUR, ask the lovers who are waiting to meet. To realize the value of ONE MINUTE, ask a person who missed the train. To realize the value of ONE SECOND, ask a person who just avoided an accident. To realize the value of ONE MILLISECOND, ask the person who won a silver medal in the Olympics. Source: 7 Habits of Highly Effective Teens (Covey)

15.  Assignment: list 5 ways time is valuable to you. Ex: to realize the value of a Saturday morning, ask a student who spent 4 hours in detention. Hootie and the Blowfish: Time http://www.youtube.com/watch?v=oFLysou G86I&ob=av2n

16.  Is the relationship between time, money and rate of return (interest), and their effect on earnings growth.  Earned Interest – $ you receive for letting someone else use your money.

17.  Time  Money  Rate of Interest (Interest Rate)

18.  The more TIME you have to save, the more money you will have at the end of the time period.  The more MONEY you have to save, the more money you will have at the end of the time period.  The higher the RATE OF INTEREST you can earn, the more money you have at the end of the time period.

19.  Compounding– the idea of earning interest on interest (snowball effect).  One of the greatest aspects of personal finance.  “Compounding is the 8 th wonder of the world.” –attributed to Albert Einstein.

20.  First year : $100 x 10% =$10 + 100 = $110  Second year : $110 x 10% = $11 + 110 = $121  Third year : $121 x 10% = $12.10 + 121 = $133.10  Fourth year: $133.10 x 10% = $13.31 + 133.10 = $146.41 You are earning INTEREST on INTEREST Compounding explained: http://www.youtube.com/watch?v=iIwyMif5EOg

21.  Try this! Go to your parents and suggest that they give you an allowance of one penny, and double it each day for one month. By the end of thirty days, they would owe you over five million dollars a day. Hard to believe? Take a calculator and punch in 0.01. Then punch "x 2", then just keep hitting "=". It goes slow for a while, then around day 20... wow! 1 $ 0.01 2 $ 0.02 3 $ 0.04 4 $ 0.08 5 $ 0.16 6 $ 0.32 7 $ 0.64 8 $ 1.28 9 $ 2.56 10 $ 5.12 11 $ 10.24 12 $ 20.48 13 $ 40.96 14 $ 81.92 15 $ 163.84 16 $ 327.68 17 $ 655.36 18 $ 1,310.72 19 $ 2,621.44 20 $ 5,242.88 21 $ 10,485.76 22 $ 20,971.52 23 $ 41,943.04 24 $ 83,886.08 25 $ 167,772.16 26 $ 335,544.32 27 $ 671,088.64 28 $ 1,342,177.28 29 $ 2,684,354.56 30 $ 5,368,709.12

22. Both are great, but what would you prefer? How much fits into your budget?

23. The cool thing is that people your age have the dynamics of time and compound interest on your side because you have more time to save and invest.

24.  Tells you how long it takes for your money to double in value.  72 ÷ interest rate = number of years for your money to double.

25.  72 ÷ (number of years) = rate needed to double your money  If you want to double your money in 10 years  72 ÷ 10 years = 7.2% interest.

26.  Assume you can earn 8% interest on your money. How long will it take $100 to grow to $200?  72 ÷ 8 = 9 years

27.  If you have $2,000 today and need $4,000 in 6 years, what interest rate do you need to earn?  72 ÷ 6 = 12% Interest

28.  The more time you have to reach your savings goals, the more money you will have at the end of that time. or  Example: Figure 4.1 8

29.  The risk-to-return relationship is a key investment principle.  The more risk you take, the greater the potential return you can receive.  Less risk, less return on your money.

31. S&P 500 price history for the last 120 years.

32.  Rate of return – same as interest rate (how fast your money grows).  When we are investing, we want a HIGH interest rate  For credit, we wanted LOW

33. Explain.

34.  Reducing your risk by spreading your money among several different investments.  People have different ideas about how much risk to take with their money.

35.  Inflation occurs when the price of goods and services rise. Has been around for decades – ranging from barely.5% to 18%  Average is 3-4%

36. YearJanFebMarAprMayJunJulAugSepOctNovDecAve 20102.63%2.14%2.31%2.24%2.02%1.05%1.24%1.15%1.14%NA 20090.03%0.24%-0.38%-0.74%-1.28%-1.43%-2.10%-1.48%-1.29%-0.18%1.84%2.72%-0.34% 20084.28%4.03%3.98%3.94%4.18%5.02%5.60%5.37%4.94%3.66%1.07%0.09%3.85% 20072.08%2.42%2.78%2.57%2.69% 2.36%1.97%2.76%3.54%4.31%4.08%2.85% 20063.99%3.60%3.36%3.55%4.17%4.32%4.15%3.82%2.06%1.31%1.97%2.54%3.24% 20052.97%3.01%3.15%3.51%2.80%2.53%3.17%3.64%4.69%4.35%3.46%3.42%3.39% 20041.93%1.69%1.74%2.29%3.05%3.27%2.99%2.65%2.54%3.19%3.52%3.26%2.68% 20032.60%2.98%3.02%2.22%2.06%2.11% 2.16%2.32%2.04%1.77%1.88%2.27% 20021.14% 1.48%1.64%1.18%1.07%1.46%1.80%1.51%2.03%2.20%2.38%1.59% 20013.73%3.53%2.92%3.27%3.62%3.25%2.72% 2.65%2.13%1.90%1.55%2.83% 20002.74%3.22%3.76%3.07%3.19%3.73%3.66%3.41%3.45% 3.39%3.38% Note: Red indicates Deflation, NA indicates data not yet released.

37.  It means you are going to be paying more in the future for the same items.  A dollar in the future won’t buy as much as a dollar today.  Depending on your type of investments, inflation can go up faster than your earnings.  Learn to invest wisely, follow the rate of inflation, and make sure your investment rates are higher than those of inflation.

38.  Taxes are another drain on your savings and investments.  Just a few other taxes:  Earnings from a job  Income from savings  Income from investment.

39.  Two reasons: Income or Growth.  Income – you get paid in cash for holding certain types of investments (Lender)  More reliable, less risk, lower return  Growth - you hold an investment with the hope that it will increase in value over time (Owner).  We will look at many examples...

40.  Lender- you lend your money to a business or the government and receive interest (income).  Owner- you actually buy a piece of a business and hope the business goes up in value (growth).  More risky

41.  Savings Accounts: payments are called interest.  U.S. Savings Bonds: formal agreement between you (lender), the U.S. government (borrower) covering a set time period  You earn interest  Penalty if cashed in early.

42.  Certificates of Deposit (CD) : just like bonds, but issued through banks (instead of government).  Money Market Accounts: Work like checking accounts and pay a higher rate of interest than savings accounts. You can take money out whenever you want and usually with no penalty.  Corporate and Government Bonds: Government bonds tend to be safer than company bonds, so corporate bonds usually pay higher rates of interest. Time periods can be 2 to 30 years.

43.  Stocks: Investments that represent ownership in a company.  “Buy low – sell high.”  The difference between the purchase price and selling price is the investor’s earnings, which is called capital gain.

44.  Real Estate. Investors buy pieces of property.  Collectibles. Are usually unique items that are relatively rare in number.  Very high risk, because popularity and demand can change.  Ex: baseball cards, art, Beanie Babies.

45.  Mutual Funds:  Pools money from several investors  A fund manager, who is an investment expert, makes all the buy and sell decisions.  Because mutual funds own a variety of investments, investors enjoy the benefits of diversification, and are a great choice of investing.

46. Get started with your savings habit now!  Complete Action Steps

47. Drawing comparisons in order to show similarities  Example: A computer is like a brain because of the way it networks information.

48.  Divide into pairs  Complete the following analogy:  “Investing is like ______________.”  Develop at least three supporting reasons for the comparison.  Create a visual representation of the analogy. List reasons on poster.  Present analogy to the class.