SAVINGS AND

INVESTINGPersonal Finance

DIVERSIFICATION Spreading out the risk of a portfolio over

many different types of investmentsMutual Funds

Collect small amounts money from many investors

Buy small amounts of equities from many sources

Money Market

RISK VS. RETURN Balances like a teeter-totter Depends on the goals of the saver

Time IncomeExpenses

LIQUIDITY Measures how available the money is for

the saver Period of time it takes for saver to get

the money and spend it

BALANCING RISK/RETURN AND LIQUIDITY

safe

safemoderaterisky

moderate

riskymoderatesafe

risky

safemoderaterisky

DOLLAR-COST AVERAGING Directing regular, small amounts of

money toward the stock market10 % gross income each paycheckBuy lowSell high

BUYING BONDS Loaning money with a promise to pay back with interest

BUYING STOCK Minor ownership in the company

Common Performance dividends; voting rights

Preferred Fixed dividends; no voting rights

Convertible Fixed dividend; voting rights

How to Read a Stock Table Stock Market Game Sign-up Form

STOCK EXCHANGES Markets for the sale of stock

NYSE – New York Stock ExchangeNASDAQ – National Association of

Securities Dealers Automated QuotientOTC – over the counterNYME – New York Mercantile ExchangeCBT – Chicago Board of Trade

STOCK INDICES Conglomerate averages Measure the performance of the market General overview

DJIA – Dow Jones Industrial AverageS&P – Standard and PoorsBNOX – Bloomberg

Northeastern Ohio Index

PERFORMANCE Bull Market

Steady rise of the market Bear Market

Steady decline of the market

PIT

►Place where trades are transacted►Card Game

Objective to corner the marketSame number of commodities as

playersWild cards►Bull►Bear

IRA Individual Retirement Arrangement

Usually tax deferredMay be matched by companyRoth is tax sheltered401(k) – IRS code for tax purposes403(b) – created for employees of non-

profits

COMPOUND INTEREST Interest calculated on the initial

principal and also on the accumulated interest of previous periods of a deposit or loan.

CONTRIBUTING $416/MONTH AT 8% ANNUALLY Pay in 40 YEARS = $1,472,039.32 Pay in 10 YEARS = $847,916.14 WAIT 10 YEARS = $628,672.36

BABY STEPS Dave Ramsey

http://www.daveramsey.com Small, smart steps will get you to

securityA place where your money is working for

youNot you working for your money

Be Radical In decision making, not spending

Be Intentional“On paper, on purpose”

STEPS $1000 Emergency Fund $0 of Personal Debt 3-6 Months of Living Expenses 10-15% in a Retirement Account College Funding

For childrenScholarshipsWork

20/20* Down Payment/Life of the Loan (House)

50/50* Living/Giving

INVESTMENT COUNSELING ACTIVITY Work in groups to devise an investment

strategy for 6 different households.Each have unique circumstancesEach have $50,000 to useYou have 30 minutes

5 minutes per scenario Remember the Baby Steps Consider the investment strategies we just

learnedLiquidity, Diversification, Risk vs. Return