nefe high school financial planning program unit three – investing: making money work for you...
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NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit Three – Investing: Making Money Work for You
Investing:Making Money Work for YouInvesting:Making Money Work for You
NORTH DAKOTA PERSONAL FINANCE EDUCATION
NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit Three – Investing: Making Money Work for You
Savings and Investments
UniqueSavingsFeatures
UniqueInvestmentFeatures
CommonFeaturesCommonFeatures
What are some features common to both investments and savings?
Rule of 72
72Interest Rate
=Years Needed to
Double Investment
72 Interest RateRequired=
Years Needed toDouble Investment
Rule of 72: $10,000 InvestedRule of 72: $10,000 Invested
6
12
18
24
Year 3% 6% 12%
INTEREST RATE
$20,000 $40,000 $160,000
$20,000
$40,000
$80,000
$20,000
NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit Three – Investing: Making Money Work for You
FinancialPlanningPyramid Penny
StockCom-
modities
CollectiblesSpeculative Stock / Bonds /Mutual Funds
RealEstate
Blue-ChipCommon
Stock
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 Earnings
Lower RiskLower
Earnings
Interest Rate
3%
24 Yrs.
$800
4%
6%
8%
12%
6 Yrs. 9 Yrs. 12 Yrs. 18 Yrs.
$400
$400
$400
$200
$200
$200
$200
$200
Impact of Higher Returns on Savings and InvestmentsRule of 72: The approximate frequency with which $100 doubles at specific interest rates
21
NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit Three – Investing: Making Money Work for You
Investment Options
NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit Three – Investing: Making Money Work for You
Options Include
•Savings accounts
•U.S. savings bonds
•Certificates of deposit
•Money market deposit accounts
NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit Three – Investing: Making Money Work for You
Options Include
•Money market mutual funds
•Corporate and government bonds
•Growth investments
NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit Three – Investing: Making Money Work for You
Options Include
•Stocks
•Real estate
•Collectibles
•Mutual funds
Dollar Cost Averaging
AmountInvested
Share Price ($)
SharesPurchase
d$1,000 $20 50
AmountInvested
Share Price ($)
SharesPurchased
$100 $20.00 5.00
$100
$100
$100
$100
$100
$100
$100
$100
$19.50
$19.25
$19.75
$19.20
$18.90
$18.00
$18.60
$19.78
5.13
5.19
5.06
5.215.29
5.56
5.38
5.06
$1,000 $20 50 $19.39* 51.66
$100 $20.90 4.78
One-time Investment Dollar-cost Averaging
$1,000
* Average Share Price4321
NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit Three – Investing: Making Money Work for You
Ready Set
GoReady Set
Go