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Unit 3 - Investing: Unit 3 - Investing: Making Money Work for YouMaking Money Work for You
AgendaAgendaOverview of Unit 3- InvestingOverview of Unit 3- Investing
Activity from the curriculumActivity from the curriculum
Optional activities, supplementary materialsOptional activities, supplementary materials
Website suggestionsWebsite suggestions
QuestionsQuestions
Unit 3Unit 3Target CompetencyTarget Competency
Propose a personal saving and investing plan
Learning ObjectivesLearning ObjectivesA.A. Differentiate between saving and investingDifferentiate between saving and investing
B.B. Assess the time value of moneyAssess the time value of money
C.C. Compare investment optionsCompare investment options
D.D. Compare the relationship between risks Compare the relationship between risks and returns related to saving and and returns related to saving and investmentsinvestments
E.E. Recommend ways to integrate savings and Recommend ways to integrate savings and investing strategies into financial planninginvesting strategies into financial planning
3-A
Savings and InvestmentsSavings and Investments
UniqueUniqueSavingsSavingsFeaturesFeatures
UniqueUniqueInvestmentInvestment
FeaturesFeatures
CommonCommonFeaturesFeatures
What are some features common to both What are some features common to both investments and savings?investments and savings?
In Unit 3In Unit 3• Time Value of MoneyTime Value of Money
• Key Investments PrinciplesKey Investments Principles
• Saving and Investment ChoicesSaving and Investment Choices
Time Value of MoneyTime Value of Moneypage 30 Student Manualpage 30 Student Manual
CompoundingCompounding
--Albert Einstein--Albert Einstein
““Compounding is the 8Compounding is the 8thth wonder of the world” wonder of the world”
Exercise 3B: The Power of CompoundingExercise 3B: The Power of Compounding
Investing Weekly at 5% InterestInvesting Weekly at 5% Interest
3-B
Amount SavedAmount SavedPer WeekPer Week
Value AfterValue After10 Years10 Years
$ 7.00$ 7.00
$ 14.00$ 14.00
$ 21.00$ 21.00
$ 28.00$ 28.00
$ 35.00$ 35.00
$ 4,720$ 4,720
$ 9,440$ 9,440
$ 14,160$ 14,160
$ 18,880$ 18,880
$ 23,600$ 23,600
1
Rule of 72Rule of 72
3-H3-H
7272Interest RateInterest Rate
==Years Needed toYears Needed to
Double InvestmentDouble Investment
7272 Interest RateInterest RateRequiredRequired==
Years Needed toYears Needed toDouble InvestmentDouble Investment
Page 32- Student Manual
Key Investment PrincipleKey Investment PrincipleTime is moneyTime is money• More timeMore time
• More moneyMore money
• More interestMore interest
More MoneyMore Money
Page 29 of Student ManualPage 67 of the Teacher Manual
Who has the most?
Key Investment Principle Key Investment Principle DiversificationDiversification
• Don’t have all your eggs in one basket
FinancialFinancialPlanningPlanningPyramidPyramid
PennyStock
Commo- dities
CollectiblesSpeculative Stock / Bonds /Mutual Funds
RealEstate
Blue-ChipCommonStock
GrowthMutual Funds
High-GradeConvertible
Bonds
High-GradePreferred
Stock
BalancedMutual Funds
High-GradeCorporate Bondsor Mutual Funds
High-GradeMunicipal Bondsor Mutual Funds
Money MarketAccounts
or Mutual Funds
Certificatesof Deposit
U.S. SavingsBonds
Insured Savings / Checking Accounts
TreasuryIssues
Highest RiskHighest RiskHighest EarningsHighest Earnings
Lower Lower RiskRisk
Lower Lower EarningsEarnings
3-J
ActivityActivityExercise 3D: Risk vs. RewardExercise 3D: Risk vs. Reward• Page 78 Instructor ManualPage 78 Instructor Manual
• Page 34 Student ManualPage 34 Student Manual
• Page 79 Answer key Instructor ManualPage 79 Answer key Instructor Manual
An Array of Investment OptionsAn Array of Investment Options• Income InvestmentsIncome Investments
– LendersLenders
Savings at 4% vs. Investments at 7.5%
An Array of Investment OptionsAn Array of Investment Options•Growth InvestmentsGrowth Investments
–OwnershipOwnership
•StocksStocks•Real EstateReal Estate•CollectiblesCollectibles
An Array of Investment OptionsAn Array of Investment Options• Mutual FundsMutual Funds
–IncomeIncome
–GrowthGrowth
Dollar Cost AveragingDollar Cost Averaging
AmountAmountInvestedInvested
Share Price ($)
SharesPurchased
$1,000.00 $20.00 50.00
AmountAmountInvestedInvested
Share Price ($)
SharesPurchased
$100.00 $20.00 5.00
$100.00
$100.00
$100.00
$100.00
$100.00
$100.00
$100.00
$100.00
$19.50
$19.25
$19.75
$19.20
$18.90
$18.00
$18.60
$19.78
5.13
5.19
5.06
5.21
5.29
5.56
5.38
5.06
$1,000.00$1,000.00 $20.00$20.00 50.0050.00 $19.39*$19.39* 51.6651.66
$100.00 $20.90 4.78
One-Time Investment Dollar-Cost Averaging
$1,000.00$1,000.00
3-L * Average Share Price* Average Share Price4321
Optional Activities Optional Activities Instructor ManualInstructor ManualUnit 3Unit 3
SM3-1-Dollars and SenseSM3-1-Dollars and Sense
SM3-2-Are You a Risk-Taker?SM3-2-Are You a Risk-Taker?
Students talk with an adult Students talk with an adult about investment experiencesabout investment experiences
Taking It HomeTaking It Home• Students take home a newsletter ( on CD) Students take home a newsletter ( on CD)
to readto read
• Students will ask their parents what Students will ask their parents what they've learned about investingthey've learned about investing
WebsitesWebsitesU.S Securities Exchange CommissionU.S Securities Exchange Commission
http://www.sec.gov/investor/teachers.shtml
www.smgww.org
www.tcalc.com/millionaire-calculator.htmlwww.tcalc.com
7%
$183.55 a month
10%
$57.72 a monthor $14.43 weekly or $2.06 a day
Assessment 3-1:Assessment 3-1: My Investing PlanMy Investing Plan
Create a personal savings and investing Create a personal savings and investing planplan
