Savings and Investments Your Money at Work Financial

Savings and Investments: Your Money at Work Financial Literacy Mrs. Dayley - Financial Literacy

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Value of Time n As you listen to the poem, list five ways that time is valuable to you. n Example: To realize the value of a Friday morning, ask a student who spend five hours in restitution. 3/9/2021 Mrs. Dayley – Financial Literacy 3

Time Value of Money 3/9/2021 n The relationship between time, money, and the rate of return (interest), and their effect on earnings growth. n See example on page 46 of Student Guide Mrs. Dayley – Financial Literacy 4

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Compounding n The idea of earning interest on interest. 3/9/2021 Mrs. Dayley – Financial Literacy 6

Earned Interest n The payment you receive for allowing a financial institution or corporation to use your money. 3/9/2021 Mrs. Dayley – Financial Literacy 7

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Assignment 4. 1 The Power of Compounding Page 47 Student Guide Mrs. Dayley - Financial Literacy

Rule of 72 n Tells you how long it takes your money to double in value. n Divide 72 by interest rate to determine number of years to double. n Divide 72 by years to determine rate needed to double your money in a given time period. 3/9/2021 Mrs. Dayley – Financial Literacy 10

Try It! Apply the Rule of 72 to find the time or rate. n Assume you can earn 6% on your money. How long will it take $100 to grow to $200? n 72 3/9/2021 ÷ 6% interest = 12 years Mrs. Dayley – Financial Literacy 11

Try It! Apply the Rule of 72 to find the time or rate. n If you have $200 today and need $400 in eight years, what interest rate do you need to earn? n 72 3/9/2021 ÷ 8 years = 9% Interest Mrs. Dayley – Financial Literacy 12

See Figure 4. 1 The Advantage of Starting Early The Impact of Time on the Value of Money Mrs. Dayley - Financial Literacy

Read page 50 in Student Guide Assignment 4. 2 The Impact of Higher Returns on Savings and Investments Mrs. Dayley - Financial Literacy

Read text on page 51 in Student Guide Study Figure 4. 3 On page 51 of Student Guide Mrs. Dayley - Financial Literacy

Key Terms Record on listening log. n Diversification (52) n Inflation (52) n Taxes (53) 3/9/2021 Mrs. Dayley – Financial Literacy 16

Income Investments (Lenders) n Savings Accounts n U. S. Savings Bonds n Certificates of Deposits (CD) n Money Market Accounts n Corporate and Government Bonds 3/9/2021 Mrs. Dayley – Financial Literacy 17

Growth Investments (Owners) n Stocks – Capital Gain n Real Estate n Collectibles n Mutual Funds 3/9/2021 Mrs. Dayley – Financial Literacy 18

Action Steps “Get Started with Your Savings Habit Now!” Complete Action Steps Page 58 Mrs. Dayley - Financial Literacy

Analogy Drawing comparisons in order to show similarities A computer is like a brain because of the way it networks information. Mrs. Dayley - Financial Literacy

Investing Analogies Divide into pairs n Complete the following analogy: n – “Investing is like _______. ” Develop at least three supporting reasons for the comparison. n Create a visual representation of the analogy. List reasons on poster. n Present analogy to the class. n 3/9/2021 Mrs. Dayley – Financial Literacy 21

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