Saving and Investing

Andrea Olson

Reward Yourself By Saving

• “Be in control of your money, don’t have your money control you!”

– Have a goal. • What are you saving for? Be

specific. College, trip, etc.– How much should I be putting

away?• You should have six to nine

months of income in your savings account.

Compounding Interest

• When interest is added to the principal, so that, from that moment on, the interest that has been added also earns interest.

• The higher the APY, the more interest you receive

Interest Formula

• M is the final amount including the principal• P is the principal amount• i is the rate of interest per year • n is the number of years invested

Interest Formula

• What is the final amount of money you’ll have if you invest…– $1,000 – For 3 years– With a 5% compound interest rate

– M=$1,000(1+.05)^3– M=???

Shoe Saver vs. Super Saver

• Shoe saver puts away five dollars per day per year in a shoebox under their bed

• Super saver puts away five dollars per day per year. With 5% interest, compounded daily

• How much more money do you think the Super Saver has made after 30 years as compared to the Shoe box saver?

Handsonbanking.org

Shoe Saver vs. Super Saver

• Choice Financial

Adapted by Legacy Program from Handsongbanking.org

Tips For Saving Money

• Prioritize your spending

• Make it an automatic habit

• Set aside “extra” money into savings

• Pay your bills on time• Save for retirement

• To save $1200 a year…it is…

• $100 a month

• $23.80 a week

• Or just $3.29 a day!

Investing

• “Let your money work for you!”• The key to successful investing is

buying when the price is low, and selling when the price is high.

• Investing involves risk, saving does NOT.

• If you cannot afford to lose a certain amount of money, do not invest it.

Types of Investments

• Low Risk Investments– Ex: Certificate of Deposit

• Bonds– Low risk

• Stocks– High risk

• Shares– www.Finance.yahoo.com

• Mutual Funds• Stocks make no promises; bonds are guaranteed

Rule of 72

72 Interest Rate= Years it will take to double

your investment

Rule of 72

• Interest rate:8%

72 8 = ??

Diversify!

“A year from now, you may wish you had started today”

-Karen Lamb

Works Cited• “Hands on Banking: Money Skills You Need for Life.” April

2012. <handsonbanking.org> • Quinn, J.B. Making the Most of Your Money Now. Simon &

Schuster, 2009.• Schickler, Scott. Conference Call Interview. 9 May 2012.• Chokkavelu, Anand. “The 100 Things I’ve Learned in Investing.”

The Motley Fool. 16 Sept. 2012. Web. 29 June 2012. http://www.fool.com/investing/general/2012/06/29/the-100-things-ive-learned-in-investing.aspx

• Buffet, Warren. Finance & Accounting. University of Virginia: Darden Business Publishing, 2005.