1. SAVING AND INVESTING FINANCIAL LITERACY– MRS. POLLISON Student Name:

2. INSTRUCTIONS: Save PowerPoint presentation on your P drive, Financial Literacy folder Add your name on title slide Refer to: NEFE High School Financial Planning Program student guides on desk Unit 3: Investing: Making Money Work for You, pgs 27-39 Fill in the missing information on the PowerPoint Print: on 3005 printer (black); handouts; 6 per page

3. Saving -Investing - SAVING AND INVESTING

4. THE TIME VALUE OF MONEY Definition: Interest Formula: **Complete Exercise 3B: The Power of Compounding, pg 30, in Student Guide, 8% only row. 8%

5. Compound interest is: Compound interest formula: The power of compounding works both ways! Procrastinating costs you compound interest and less money for your goals! SHOW ME THE MONEY!!

6. THE RULE OF 72 – DIVIDE 72 BY THE INTEREST RATE OR NUMBER OF YEARS TO SEE HOW LONG IT WILL TAKE TO DOUBLE YOUR MONEY. Solve the following: $100 investment, 24 years – what rate to double? $100 investment, 8% - how many years to double? $100 investment, 11 years – what rate to double? $100 investment, 7.75% - how many years to double?

7. RISKY BUSINESS All investments involve some element of risk! What is risk? Risk-Reward Tradeoff – describe it! Check out the Financial Planning Pyramid on pg 33. List 2 low risk investments: List 2 high risk investments: List 3 medium risk investments: Complete Exercise 3D: Risk versus Reward, pg 34 Who has a lower-risk investment program?_____________________ Who has the potential for higher earnings?_____________________ What is each person’s highest-risk investment? Carrie_______________________ Darren__________________________ What is each person’s lowest-risk investment? Carrie________________________ Darren__________________________

8. INCOME INVESTMENTS: (BRIEF DEFINITION) Savings accounts US savings bonds Certificates of deposit Money market deposit accounts Money market mutual funds Corporate and government bonds

9. GROWTH INVESTMENTS: (BRIEF DEFINITION) Stocks Real estate Collectibles Mutual funds

10. DIVERSIFICATION: (READ ONLY) Reducing investment risk by putting money in several different types of investments. “Don’t put all of your eggs in one basket.” Spread your money around – reduce risk! Example: mutual fund