This weekNext Week  Monday2/25- Chapter 10  Tuesday 2/26- Project Workday  Wednesday 2/27- Chapter 10  Thursday 2/28- Project Workday  Friday 3/1- Chapter 11  Monday 3/4- Project Due, Unit 4 Test  Tuesday 3/5- Poster Workday  Wednesday 3/6- Poster Presentations  Thursday 3/7- Exam- 1 st /2 nd.  Friday 3/8- Exam 3 rd /4 th Slide 1

Chapter 10 Basics of Saving and Investing

Slide Reasons for Saving and Investing Savings is money set aside for the future. Investing is a strategy to earn more on your money than the rate of inflation. Wealth is the accumulation of assets over time.

Slide Reasons for Saving and Investing Short-Term Goals o Contingency planning o Vacation planning Medium-Term Goals o Buying a car o Paying for college o Planning a wedding Long-Term Goals o Providing for a family o Buying a house

 Retirement is the period of time when you are not working but are able to meet expenses.  Sources of income include: o Retirement plans o Social security o Savings o Investments Slide Reasons for Saving and Investing

Slide Reasons for Saving and Investing Amount Invested Interest Rate Investment Term Maturity Value $10,000 investment6%20 years $32,071 $10,000 investment 6%30 years $57,435 $1,000 investment 8%30 years $10,063 $1,000 investment 8%40 years $21,725 $1,000 per year investment 5%20 years $33,066 $1,000 per year investment 5%30 years $66,439 $1,000 per year investment 5%40 years $120,80 0 $100 per month investment 7%25 years $81,007 $100 per month investment 7%30 years $121,99 7 $100 per month investment 7%40 years $262,48 1

Slide 7 The higher the risk, the greater your possible return. Risk-free investments are guaranteed by the government—U.S. savings bonds, Treasury bills. Return on Investment (ROI) is the amount that savings or investments grow expressed as a percentage Principles of Saving and Investing

Slide Principles of Saving and Investing Example 1:Bought an investment for $500; received dividends of $18 for the year Return: $18 Rate of return: $18 ÷ $500 = 3.6% (annual rate of return) Example 2:Bought an investment for $500 on March 1; sold it on October 1 for $525. Return: $25 Rate of return: $25 ÷ $500 = 5% Note: The 5% return was received after only 7 months. The annual return would be higher. Calculate the annual ROI as follows: 0.05 ÷ 7 months × 12 months = 8.6% (annual rate of return)

 Inflation risk  Industry risk  Political risk  Stock risk Slide Principles of Saving and Investing Investment risk is the potential for change in the value of an investment.

 Tax deferral is a postponement of taxes to be paid. o Taxes on gains are not paid until the money is withdrawn.  Tax exemption means savings and investments are not taxed. o Example: Series EE and Series I savings bonds are tax-free if used for education. Slide Principles of Saving and Investing

Slide 11 Systematic saving involves regularly setting aside cash to achieve goals. Systematic investing is a planned approach to making investments on a regular basis. Market timing involves buying and selling stocks based on what the market is expected to do Strategies for Saving and Investing

Slide Strategies for Saving and Investing Investment tracking involves making investment choices by following stock prices over time.

Slide Strategies for Saving and Investing

Slide Strategies for Saving and Investing A bull market exists when stock prices are steadily increasing. A bear market exists when prices are steadily decreasing. Economic conditions (growth or decline) can affect investment strategies.

Slide 15 Dollar-Cost Averaging The systematic purchase of an equal dollar amount of the same stock at regular intervals 10-3 Strategies for Saving and Investing