Wealth Management Mrs. Tobe

Topic 1: Deciding What You Want in Life

Goal – the purpose toward which an endeavor is directed; an objective Short-term goals – expect accomplishment over a short period of time; relates to the goal’s overall timeline Long-term goals – typically set with a longer timeline than short-term goals; five years on average Benefits – helps to keep you on track and in line to meet whatever goal you have set

Topic 1: Deciding What You Want in Life Types of goals Career, community service, creative, education, family, financial, physical, recreation Steps for setting goals Be precise, set priorities, write goals down, keep operational goals small, set performance goals (not outcome goals), set realistic goals

Topic 1: Deciding What You Want in Life 1. What’s involved in setting a goal? 2. What are the characteristics of effective goals? 3. What’s the difference between short- term and long-term goals? 4. In what aspects of their lives can they use goal setting? 5. What are S.M.A.R.T. goals?

Topic 1: Deciding What You Want in Life Resources – Something that can be used for support or help. For example, the local library is a resource for books, magazines, and other reference materials. Scarcity – Ever-present situation in all markets whereby either fewer goods are available than the demand for them, or only too little money is available to their potential buyers for making the purchase. This universal phenomenon leads to the definition of economics as the "science of allocation of scarce resources.” Individuals, families, businesses, and government all face this basic economic problem.

Topic 1: Deciding What You Want in Life Distribution – Payment of principal, interest, or dividend by the issuer of a security to the security holders, on a regular (typically monthly or quarterly) basis. For example, you own stock in Apple and each month you receive a dividend check for amount of the company you own. Wealth management – Wealth Management is classified as an advanced type of financial planning that provides individuals and even families with private banking, estate planning, asset management, legal service resources, trust management, investment management, taxation advice, and portfolio management Allocation – authorization to incur expense or obligation up to a specified amount, for a specific purpose, and within a specific period. For example, the school district will allocate funds to the music department for the purchase of new uniforms until their annual fundraiser is completed.

Topic 1: Deciding What You Want in Life Explain how scarcity relates to forms of distribution Supply of items are limited. Demand for items makes the item scarce. prices, majority rule, contests, force, first come/first served, lottery, sharing, personal characteristics

Topic 1: Deciding What You Want in Life Describe the need to compare costs of alternative financial decisions with their benefits. Weight options to see what is the best financially Look at benefit and see if worth the cost

Discuss how cost/benefit comparisons can result in effective allocation systems. Individuals and business will look at the cost of certain benefits to see how effective it may be Look into many different options Compare pros, cons, benefits, and costs Topic 1: Deciding What You Want in Life

Property rights – the legal right to own property; extensive property rights of private individuals in most goods is a basic element of the capitalist system. In our market economy, we have the right to own, use, and dispose of property. Financial institution – institution that collects funds from the public to place in financial assets such as stocks, bonds, money market instruments, bank deposits, or loans. Depository institutions (banks, savings and loans, savings banks, credit unions) pay interest on deposits and invest the deposit money mostly in loans. Nondepository institutions (insurance companies, pension plans) collect money by selling insurance policies or receiving employer contributions and pay it out for legitimate claims or for retirement benefits. Nonprofit organization – association that is allowed to exist without paying income taxes. Most nonprofit organizations are in a socially desirable business (hospital, educational institution, charity) and those qualified by the Internal Revenue Service may receive contributions that are tax deductible to the donor.

Topic 1: Deciding What You Want in Life Identify examples of institutions Institutions evolve in market economies to help individuals and groups accomplish their goals. Banks, labor unions, corporations, legal systems, and not-for-profit organizations are examples of important institutions. A different kind of institution, clearly defined and enforced property rights, is essential to a market economy.

Explain the relationship of property rights to decision-making. Property rights help insure that people bear the costs and reap the benefits of their decisions. Property rights and contract enforcement encourage investment by assuring investors that they will reap the rewards of deferring consumption and assuming risk if these investments perform well. Topic 1: Deciding What You Want in Life

Discuss how institutions help to reduce costs for buyers and sellers. Banks match savers with borrowers; and investment banks match entrepreneurs who organize new firms with investors who provide the needed funds. Many institutions work to promote the goals of certain interest groups. Labor union, for example, increase the negotiating power of workers in their dealings with employers. Topic 1: Deciding What You Want in Life