no slide title
DESCRIPTION
TRANSCRIPT
![Page 1: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/1.jpg)
A Teaching Guide
An Introduction to...
![Page 2: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/2.jpg)
2
Financial Literacy Defined
Financial literacy refers to the basic skills people need to manage money and make financial decisions.
![Page 3: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/3.jpg)
3
A Financial Literacy Crisis
61% of people age 24-64 have no retirement savings account of any kind.
Average credit card debt among college students is over $2,300.
![Page 4: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/4.jpg)
4
2002 Personal Finance Survey
4,024 High School Seniors
Average Score 50.2% -- a failing grade
Yet, 65% of students said they felt very or somewhat sure about their ability to manage money
Where They Learned About Money
0
10
20
30
40
50
60
Home Friends Self
Home
School
Friends
Media
Self
Jump$tart Coalition for Personal Financial Literacy Study
![Page 5: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/5.jpg)
5
The Good News
As little as 10 hours of classroom instruction can affect how teens handle their money
58% of students improved their spending habits
56% of students improved their savings habits
NEFE Financial Literacy Study
![Page 6: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/6.jpg)
6
What makes this Program Different?
It contains a sound basic instruction on general personal finance PLUS
It gives solid information on the basics of investing showing alternatives to savings
It is free and we are not selling anythingNot commercial / State sponsored Local resources
![Page 7: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/7.jpg)
7
Concepts Addressed
Teach how to think critically and make sound decisions
Financial Choices & DecisionsPersonal values, goals, needs, wantsFinancial decision making processFinancial marketsFinancial products and servicesResources of financial information
![Page 8: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/8.jpg)
8
Concepts Addressed
Students have money but few management skills
Money Management Financial planning and record keeping Personal economic resources Spending patterns Consumer credit management Saving and investing and Insurance
![Page 9: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/9.jpg)
9
Concepts Addressed
Investor ProtectionRights and responsibilitiesLaws and agenciesFraud and redress
Concepts, teaching strategies and materials are compatible with the Voluntary National Standards in Economics and the Jump$tart Coalition Guidelines
![Page 10: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/10.jpg)
10
Concepts Addressed
Young people who fail to begin saving and investing in their youth lose out on potentially substantial retirement income
![Page 11: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/11.jpg)
11
Financial Foundation
High Risk
Medium Risk
Lower Risk
Options futures
Stocks, Bonds
Real estate, Mutual funds
Financial Foundation
Income, Insurance, Financial Goals/Budget,
Controlled Spending and Manageable Debt
CDs, MM, Bank, CU, EE
![Page 12: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/12.jpg)
12
FL2010 web site
Unique community of personal finance instructors/ chat area
Recognizes frequent visitorsSpecial version can be made for youOnline version of training guideNewsletterFinancial news/ Hot sites
![Page 13: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/13.jpg)
13
Web Site
Local training opportunities Local trainers are listed Local unbiased investor education experts/
Dept. of Securities/ SEC/ NASDRelevant state curriculum standardsTries to be the start page on the Web for
finance instructors everywhere
![Page 14: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/14.jpg)
14
Workshop Objectives
Promote the importance of teaching personal finance in schools.
Encourage teachers to incorporate personal finance concepts into their classrooms.
Provide an overview of “Personal Finance for the Economic Classroom Teaching Guide.”
![Page 15: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/15.jpg)
15
TEACHING GUIDE
5 Units Lesson outline
Estimate time of presentationObjectives, sources of materials, proceduresWorksheets, graphics, overheads
Tests and answer keysAppendix and Glossary
![Page 16: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/16.jpg)
16
Five, Self-contained Units
Understanding financial marketsMaking financial decisions Investment choices and finding and using
sources of informationRecognizing & victim-proofing against
fraudDeveloping a personal financial plan
![Page 17: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/17.jpg)
![Page 18: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/18.jpg)
18
Unit 1 - Objectives
How markets workRecognizing public companiesWhat makes stock prices fluctuate Role of government in securities regulation
![Page 19: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/19.jpg)
19
Why teach this Unit?
Events in financial markets affect all of uscost of credit, prices, eliminate or add jobsstudent’s every-day lives; mall spending
money, part-time jobs; car purchaseSoon the students will be required to
participate by employer-based retirement plans or individual investing
De-mystify financial markets
![Page 20: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/20.jpg)
20
Capitalism
Our economic system in which:private ownership of property existsownership of capital provides income free competition for getting capitalprofit motive is basic to economic life
Laissez-faire, private enterprise, free-price
![Page 21: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/21.jpg)
21
How markets work
Define marketsMarket economy v. command economy
markets in which students participatesupply and demand - football tickets ex
Financial marketsexchanges - stock markets
Internet - ebay etc.
![Page 22: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/22.jpg)
22
Recognizing public companies
Free enterprise systemEntrepreneursDefine private companiesDefine public companiesStudents identify companies they deal with
as public or private
![Page 23: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/23.jpg)
23
What makes stock prices fluctuate
Investor Actions: Buying/Selling
Business Conditions: Profits / Losses
Government Actions: Taxes, Interest Rates
Economic Indicators: Personal Income, Consumer Spending, Employment,
Inflation
International Events: War, Natural Disaster
![Page 24: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/24.jpg)
24
Role of government in securities regulation
Caveat EmptorRole of the States Roles of the federal governmentSelf regulatory agencies
NASDExchangesAccountants & Lawyers
![Page 25: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/25.jpg)
25
Regulation of Financial Markets
Organizations with the purpose of assuring professional and ethical
investing practices...
Securities and Exchange Commission (SEC)
State Securities Agencies
National Association of Securities Dealers (NASD)
Commodity Futures Trading Commission (CFTC)
![Page 26: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/26.jpg)
26
Unit 1 - Summary
Definition of economic concepts specifically free enterprise and markets as well as other basic terms
Student participation in marketsFinancial markets, how they work, how
they affect us and their regulationEntrepreneurship: public & private
business
![Page 27: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/27.jpg)
![Page 28: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/28.jpg)
28
Unit 2 - Objectives
Simulated step-by-step decision making: car purchase model
Demonstrate the time value of moneyThe power of compoundingThe costs of creditSteps in getting financial advice
![Page 29: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/29.jpg)
29
Why teach this Unit?
Students have money but few know how to manage it
Students who understand and practice sound financial decision making are on the road to success
Young people who fail to begin saving and investing lose out on creating adequate retirement income
![Page 30: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/30.jpg)
30
Financial Tasks of Young Adults
train for a career Starting a family establish a good credit record develop a financial plan consider insurance protection save and invest for future goals
![Page 31: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/31.jpg)
31
Financial decision making model
Define issue or problem - buying a car (p 2.4)
Gather informationAlternatives and consequencesMake a decision and take actionModify as needed
![Page 32: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/32.jpg)
32
Weighing trade-offs and opportunity costs
Delayed v. instant gratificationNeeds v. Wants (p. 2.5)ChoiceCostsBenefitsTrade-offs: job or college Opportunity costs: job income v college cost
![Page 33: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/33.jpg)
33
The Time Value of Money
The time value of money is the growth of money over time as a result of investment earnings.
Investments made earlier in life have a greater pay-off than those made later in life.
![Page 34: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/34.jpg)
34
Worksheet
See “How Time Affects the Value of
Money” Student Worksheet, Unit 2,
Page 2-19 and 2-20.See
![Page 35: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/35.jpg)
35
How Long to Double your Money
Earnings Rate2%
3%
6%
12%
18%
36%
Years to Double36 years
24 years
12 years
6 years
4 years
2 years
![Page 36: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/36.jpg)
36
Rule of 72 Double Your Money
72 divided by the % rate of return
equals the number of years
to double your money
At 10% it takes 7.2 years
(7210=7.2)
![Page 37: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/37.jpg)
37
Dollar-Cost Averaging
Dollar-cost averaging is the technique of investing the same fixed dollar amount in an investment, such as a mutual fund, at regular intervals over
a long period of time.
![Page 38: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/38.jpg)
38
Credit Cards
Less than 40% of card holders pay entire balance each month
If interest is 12% APR
adds 12% to price of items purchased
![Page 39: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/39.jpg)
39
If You Owe...
A Minimum Means a Payment of Debt Lasting
2%……………..…..32 years3%…………………12 years4%………………… 8 years5%………………… 6 years
$2,000 on a 19.8% APR Credit Card
assuming no new charges
![Page 40: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/40.jpg)
40
If a 21 year old college student
owes . . . . $2,300 on 18% APR credit card
Makes minimum monthly payment
Will take 33 years to pay off debt, assuming no new purchases.
Total Interest Payments$5,831
![Page 41: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/41.jpg)
41
A What if Question
What if you could earn 18% on your money instead of paying interest charges?
![Page 42: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/42.jpg)
42
From Debt to Earnings
If you pay off your credit cards you have done the precise equivalent of earning 18%.
![Page 43: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/43.jpg)
43
Your Credit Report
Credit inquiries - 2 yr. Payment patterns - 7yrs. Bankruptcy - 10 years. For employment and mortgages over $75,000
information can be kept for a lifetime.
How long information stays on your record?
![Page 44: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/44.jpg)
44
Unit 2 - Summary
Financial decision making for studentsTime value of moneyUnderstanding trade-offs and opportunity
cost ( delayed v instant gratification)Smart decisions about credit
![Page 45: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/45.jpg)
![Page 46: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/46.jpg)
46
Unit 3 - Objectives
Analyze the differences between saving and investing
Identify common investment options using pyramid of risk
What is a prospectus Interpret mutual fund and stock quotes
![Page 47: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/47.jpg)
47
Why teach this unit?
Understanding “risk and return” is critical to financial decision making
Young people who don’t know about saving and investing alternatives are at risk of being too conservative or too risky
Students will develop critical thinking skills by examining the credibility of sources and content of information
![Page 48: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/48.jpg)
48
Savings and investment products
Savings products:
Savings accounts
Money-market funds
CDs
Investment products
Stocks represent ownership
Bonds are a type of loan
Mutual Funds
![Page 49: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/49.jpg)
49
Selecting Savings & Investments
Liquidity: the speed and ease with which an asset can be converted into cashHow quickly will you need your moneyHighly liquid: savings accounts & money
marketsLess liquid: stocks, bonds, CDs
![Page 50: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/50.jpg)
50
Selecting Savings and Investments
When choosing investments consider…
risk = potential return or risk = potential return
Inflation risk Political risk Fraud risk
Interest rate risk Business failure risk Market price risk
![Page 51: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/51.jpg)
51
Other factors in selecting investments
Return (historically inflation rate+3%) comes from earnings,growth or tax benefits
Inflation (rise in price of goods & services)Diversification (spreading risk)Taxes (exempting or deferring)
![Page 52: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/52.jpg)
52
How Securities Are Bought and Sold
New issues registered with SEC and, in some cases, the state securities agencies.
A prospectus, giving details about a company's operation and the stock to be issued, is printed and distributed to interested parties.
Stocks can be purchased though a broker, directly from the company, via the internet or through mutual funds
![Page 53: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/53.jpg)
53
Financial Foundation
High Risk
Medium Risk
Lower Risk
Options futures
Stocks, Bonds
Real estate, Mutual funds
Financial Foundation
Income, Insurance, Financial Goals/Budget,
Controlled Spending and Manageable Debt
CDs, MM, Bank, CU, EE
![Page 54: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/54.jpg)
54
Financial Information
Prospectus - a legal document describing an investment offered for sale contains:
The goal of the company or mutual fund
Financial statement showing assets and liabilities
Performance (profit and loss) over a period of years
Any fees the investor must pay
![Page 55: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/55.jpg)
55
Understanding Price Quotations
Stocks are quoted in $ and ¢.
Bonds are...sold in $1,000 units but are quoted as 100ssold by face value, discount, and premium
Mutual funds quote a Net Asset Value (NAV) NAV = Market value of all the fund’s securities - liabilities /
number of shares
![Page 56: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/56.jpg)
56
Understanding Stock Price Quotations
High (52 Week)= Highest price paid in the last 52 weeks
Low (52 Week)= Lowest price paid in the last 52 weeks
Stock = Name of the stock
Div = Yearly dividend the stock pays
Yield = Percentage return based on every $100
P-E = Price-to-earnings ratio (stock price/12 mo. Earnings per share)
![Page 57: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/57.jpg)
57
Understanding Stock Price Quotations
Volume =
# of share of that stock that changed hands
High, Low Close and Net Change =The high, low, close and net change in the price of the stock for the previous day
![Page 58: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/58.jpg)
58
Understanding Bond Price Quotations
Bond/Coupon Rate/Date of Maturity - percentage rate paid annually on the bond’s $1,000 face value and
year the bond ends
Current Yield - the annual interest divided by the closing price
Volume - number of bonds of this kind sold that day (multiplied by 10,000)
Close/Net Change - The final closing price of the bond and the change in price for the
day before.
![Page 59: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/59.jpg)
59
What To Look For In a Financial Advisor?
Credentials - CFA, ChFC, CPA, RIA, Reg. Rep.,
member IAFP, NAPFA, etc.
Services provided
Costs and fees How the Financial Advisor is paid -
Fee-only, commission or combination
![Page 60: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/60.jpg)
60
Costs of Investing
High costs are an often overlooked drag on long-term performance.
Money-saving tips• be skeptical of load funds• look for low expense ratios
Industry Average: 1.11%
• pass up 12b-1 plans
![Page 61: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/61.jpg)
61
Unit 3 - Summary
Unit 3 discusses investment choices, reasons to invest savings and investment choices; the decisions made relating to investment choices and the true value of money. Remember that the purpose of investment diversification is to reduce risk. Also, let us emphasize to young people how understanding investment choices and investing at a young age can help them achieve their life-long goals.
![Page 62: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/62.jpg)
![Page 63: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/63.jpg)
63
Unit 4 - Objectives
Examine types of investment fraud
Analyze fraud cases for warning signs
Role-play a fraud sales pitch
Examine ethics of fraud and how to report to authorities
![Page 64: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/64.jpg)
64
Investment Fraud
Estimates are that unwary investors lose $10 billion a year --
about
$1 million every hour
to investment fraud
![Page 65: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/65.jpg)
65
Role play a fraudulent sales pitch
Call comes from a distant city.
Salesperson counters every objection.
Offers no risk, high returns and secret tips.
Demands immediate action.
Script - page 4-19
![Page 66: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/66.jpg)
66
Popular Types of Investment Scams
Pyramid schemes Precious metals fraud International investing Stock swindles and insider trading Franchise/business opportunities Ponzi schemes Affinity fraud
![Page 67: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/67.jpg)
67
Investor Protections
The Securities Act of 1933
The Securities Exchange Act of 1934
State and federal securities agencies
Self-Regulatory Organizations (SROs)
![Page 68: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/68.jpg)
![Page 69: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/69.jpg)
69
Unit 5 - Objectives
Identify short and long term goalsDetermine net worthEstimate income & expensesDesign a personal financial plan Make asset allocation for retirement
![Page 70: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/70.jpg)
70
Myths
I don’t earn enough money to plan.
Investing is for people with lots of money.
Young people don’t need to think about saving for retirement.
Social security is a
business-funded program for old, poor people.
![Page 71: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/71.jpg)
71
Why Make a Financial Plan?
Planning is a tool to help you:
• live within your income• know your goals and priorities• meet your expenses• face emergencies• limit credit use• reduce conflict• save and invest for future• gain independence and control
![Page 72: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/72.jpg)
72
A Financial Plan
identify goals figure net worth estimate income
and expenses
save - pay yourself Asset Allocation implement the plan review and modify
![Page 73: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/73.jpg)
73
Live Within Your Income
Financial Records
Net Worth
Income/Expenses
(Worksheets in Unit 5)
![Page 74: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/74.jpg)
74
Employee Savings Plans
25% of the eligible people do not participate
They lose
• power of compounding
• tax deferral
• employer match
![Page 75: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/75.jpg)
75
Diversification
Select different categories of investments among various industries
to reduce risk.
Stocks
CashReserv
es
Bonds
![Page 76: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/76.jpg)
76
Inflation
3.1% 3.8%
5.3% 5.8%
10.7%12%
10
8
6
4
2
0Long-TermCorporate
Bonds
U.S. Treasury
Bills
CommonStocks
Long-TermGovernment
Bonds
Source: Ibbotson Associates, Inc.Past performance is not indicative of future returns.
Average Annual Total Returns (1926-2001)
![Page 77: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/77.jpg)
77
Which Investment Mix* in employer-sponsored plan
Aggressive Growth Conservative Growth
‘Aggressive Growth Growth
Moderate Growth
Conservative Growth
Bonds
StocksBonds
Stocks
Bonds
StocksStocks
100% Stocks 80% Stocks 20% Bonds
60% Stocks 40% Bonds
40% Stocks 40% Bonds 20% Cash
*Asset Allocation
![Page 78: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/78.jpg)
78
Worksheet
See “Employer-Sponsored Retirement Plans” worksheet,
Unit 5, pages 5-28 and 5-29.
![Page 79: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/79.jpg)
79
Tips for Financial Success
Get started early Invest for the long term Continue to study and
learn Participate in employer-
sponsored plans Know when to seek advice
Financial
Success
Award
![Page 80: No Slide Title](https://reader033.vdocuments.mx/reader033/viewer/2022061222/54c0fdcf4a795935078b4696/html5/thumbnails/80.jpg)
For information about FL2010 Check the Web site at
www.fl2010.org.
• Please complete evaluation forms.• Register your attendance.