1. 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

2. Chapter 10 Basics of Saving and Investing

3. Slide 3 10-1 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.

4. Slide 4 10-1 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

5.  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 5 10-1 Reasons for Saving and Investing

6. Slide 6 10-1 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

7. 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. 10-2 Principles of Saving and Investing

8. Slide 8 10-2 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)

9.  Inflation risk  Industry risk  Political risk  Stock risk Slide 9 10-2 Principles of Saving and Investing Investment risk is the potential for change in the value of an investment.

10.  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 10 10-2 Principles of Saving and Investing

11. 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. 10-3 Strategies for Saving and Investing

12. Slide 12 10-3 Strategies for Saving and Investing Investment tracking involves making investment choices by following stock prices over time.

13. Slide 13 10-3 Strategies for Saving and Investing

14. Slide 14 10-3 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.

15. 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