1. AGENDA 1. Warm-Up 2. Savings Quick Write 2. Discuss Savings and Investing 3. Economic Laboratory

2. AGENDA 1. Why would someone want to buy preferred stock over common stock? 2. If you were to give someone advice about picking stocks what is the most important tip you would tell them?

3. SAVINGS QUICK WRITE On a separate piece of paper titled Savings answer the following prompt in 3-5 sentences: What is the purpose of saving money and why is it important to save money?

4. SAVING AND INVESTING

5. INTRODUCING INVESTING Investment: giving up some of your resources now in order to gain later Essential part of free market system (Win, Win) People make money because of interest from putting into savings account Promotes economic growth of the nation Bank collects money Bank loans to business What do businesses do with loans? What are consequences if little savings available to banks ?

6. 3 FACTORS TO CONSIDER WHEN INVESTING 1. Rate of Return: How much money will you earn? Percentage (interest on a savings account) Dollar amount (investing in a business) 2. Degree of risk: chance of losing money Saving account=safe Stock market= more risky 3. liquidity: how easy you can convert to cash Savings account= very liquid Real estate= not liquid In general Low return= low risk, high liquidity High return= high risk, low liquidity

7. BUILDING CREDIT Get a job! Save at least 10-12% Open a savings/checking account Pay bills on time! Open a credit card Dept. store Gas card Visa/MasterCard/AMEX Don’t apply for too many Don’t pay annual fees Use the card for small things, and pay it off IN FULL every month for good credit

8. MUTUAL FUNDS Pools money from hundreds and thousands of investors to construct a portfolio of stocks, bonds, real estate, or other securities Each investor in the fund gets a slice of the total pie. A mutual fund provides diversification, spreads risk and provides the convenience of buying and selling shares in the fund on any business day

9. TREASURY NOTES, BONDS AND BILLS Fed Gov’t issues bonds/bills when borrowing for over a year Gov’t makes periodic interest payments Regarded as safest of all financial investments T-bills have 13, 26 or 52 week maturity Do not pay interest, sold on discount basis (ex $10,000 T-Bill might sell for $9300)

10. 10 RULES OF INVESTING 1. Start early Time=money Compound interest Time to ride out the low times 2. Diversify Invest in many different stocks, bonds, and real estate High, medium, and low risk 3. Keep costs low Don’t pay too much commission when you invest 4. INVEST IN YOURSELF Train/educate to get more $$$ Real estate 5. Get help! Talk to a financial advisor 6. Be Patient Reduce risk to buy and sell quickly 7. Stay out of debt Real estate and student loans okay 8. Let your profits run Long term investments make more $$$ 9. Set a goal 10. Remain honest

11. BONDS Certificates sold by a company or government to finance projects or expansion Typically a fixed return for a fixed period of time Low risk=low return Vocab Principle: how much you pay for the bond Coupon rate: interest on the bond Maturity: time when payment is due Issuer: seller of the bond Holder: investor who buys the bond Example: coupon rate= 5% annually Maturity= 10 years Principle= $1000 Owner will receive $50 a year for 10 years

12. RETIREMENT INVESTMENTS Males should invest 10% Females 12% Why? People living longer Early retirement 401 (K) Retirement account through your employer Automatic, free deduction from your paycheck Some companies match your contribution Put into an investment fund to make interest Collect at age 59.5

13. WARM UP 5/5/14 Copy agenda. What three factors should you consider when investing? What is a 401(k)?

14. THE STOCK MARKET “Nothing has created more millionaires in this country.” Besides bonds, corporations can raise $$$ by selling stocks Stocks are issued in portions called shares, the owner is called shareholder Shares represent partial ownership in a company Stocks also called equities

15. 2 WAYS TO MAKE MONEY IN STOCKS 1. Capital Gains: buy a stock for a low price and sell it when it goes up 2. Dividends: a portion of a company’s profits gets distributed to shareholders quarterly

16. TYPES OF STOCKS Income stock: pays dividends Usually older, established companies Growth stock: Few dividends Company instead reinvests profits for its own growth Common stock: Voting rights to determine company’s decisions Preferred stock: Non voting Receives dividends before common stock holders If company goes out of business, they get their money back first Stock splits: when a single share is divided into 2 or more shares Occurs when price of a share gets too high, discouraging people to buy

17. WARM UP 5/6/14 Copy agenda. What is a stock? What are two ways to make money with stocks?

18. HOW STOCKS ARE TRADED Stockbroker: person who links buyers and sellers of stocks Advises individuals as to what stocks they should buy Brokerage Firm Stockbrokers work for businesses that specialize in trading stocks Charge a fee or commission for each transaction Online

19. STOCK EXCHANGES Major markets for buying and selling stocks Major Exchanges NYSE Largest and most powerful Restricted number of members who can trade Handles the largest, most established, and successful companies Blue chip companies NASDAQ Sells slightly riskier stocks from less established companies High tech and energy stocks Over-the-counter Traded electronically Not an organized exchange

20. FOREIGN EXCHANGES Tokyo Stock Exchange Berlin-Bremen Exchange Athens Stock Exchange Korean Stock Exchange Zimbabwe Stock Exchange

21. MEASURING STOCK PERFORMANCE Dow Jones Industrial Average Most used index to tell investors how stocks are doing Made up of 30 big companies Represent every important sector in the stock market S&P 500 Top 500 companies in the US Bull vs. Bear Market

22. INDEX FUNDS Mutual fund holding a group of stocks that closely matches an established index S&P 500 Dow Jones

23. WARM UP 5/7/14 Copy agenda. What is the Dow Jones Industrial Average? How can you buy stocks?

24. READING STOCK TABLES Vocabulary Sym: symbol of the stock, usually 2 or 3 letters Div: dividend given to shareholders the last quarter Yld%: yield, dividend divided by current price Vol: volume, or the amount of shares that have been traded that day Hi: highest price for the stock during that day of trading Low: lowest price for the stock during that day of trading Close: price of stock at the end of the day Chg: difference between last week’s price and the most recent price

25. http://money.cnn.com/magazines/moneymag/money101/

26. WARM UP 5/8/14 Copy agenda. What are some ways to build a good credit rating? What are some good kinds of debt?

27. WARM UP 5/9/14 Copy agenda. What could you do right now to be more financially responsible? What are the two others terms for stock?