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Transcript of This weekNext Week Monday2/25- Chapter 10 Tuesday 2/26- Project Workday Wednesday 2/27- Chapter...
This week Next Week
Monday2/25- Chapter 10
Tuesday 2/26- Project Workday
Wednesday 2/27- Chapter 10
Thursday 2/28- Project Workday
Friday 3/1- Chapter 11
Monday 3/4- Project Due, Unit 4 Test
Tuesday 3/5- Poster Workday
Wednesday 3/6- Poster Presentations
Thursday 3/7- Exam-1st/2nd.
Friday 3/8- Exam 3rd/4th
Slide 1
Chapter 10Basics of Saving and Investing
Slide 310-1 Reasons for Saving and Investing
• Savings is money set aside for the future.
• Investing is a strategy to earn more on your money than the rate of inflation.
• Wealth is the accumulation of assets over time.
Slide 410-1 Reasons for Saving and Investing
• Short-Term Goalso Contingency planningo Vacation planning
• Medium-Term Goalso Buying a caro Paying for collegeo Planning a wedding
• Long-Term Goalso Providing for a familyo Buying a house
Retirement is the period of time when you are not working but are able to meet expenses.
Sources of income include:oRetirement plansoSocial securityoSavingso Investments
Slide 510-1 Reasons for Saving and Investing
Slide 610-1 Reasons for Saving and Investing
Amount Invested
Interest Rate
Investment Term
Maturity Value
$10,000 investment 6% 20 years $32,071$10,000 investment 6% 30 years $57,435$1,000 investment 8% 30 years $10,063$1,000 investment 8% 40 years $21,725$1,000 per year investment
5% 20 years $33,066
$1,000 per year investment
5% 30 years $66,439
$1,000 per year investment
5% 40 years $120,800
$100 per month investment
7% 25 years $81,007
$100 per month investment
7% 30 years $121,997
$100 per month investment
7% 40 years $262,481
Slide 7
• The higher the risk, the greater your possible return.
• Risk-free investments are guaranteed by the government—U.S. savings bonds, Treasury bills.
• Return on Investment (ROI) is the amount that savings or investments grow expressed as a percentage.
10-2 Principles of Saving and Investing
Slide 810-2 Principles of Saving and Investing
Example 1: Bought an investment for $500; received dividends of $18 for the year
Return: $18Rate of return: $18 ÷ $500 = 3.6% (annual rate of return)
Example 2: Bought an investment for $500 on March 1; sold it on October 1 for $525. Return: $25Rate of return: $25 ÷ $500 = 5%Note: The 5% return was received after only 7 months. The annual return would be higher. Calculate the annual ROI as follows:0.05 ÷ 7 months × 12 months = 8.6% (annual rate of return)
Inflation risk Industry risk Political risk Stock risk
Slide 910-2 Principles of Saving and Investing
Investment risk is the potential for change in the value of an investment.
Tax deferral is a postponement of taxes to be paid. oTaxes on gains are not paid until the money is
withdrawn. Tax exemption means savings and
investments are not taxed.oExample: Series EE and Series I savings bonds
are tax-free if used for education.
Slide 1010-2 Principles of Saving and Investing
Slide 11
• Systematic saving involves regularly setting aside cash to achieve goals.
• Systematic investing is a planned approach to making investments on a regular basis.
• Market timing involves buying and selling stocks based on what the market is expected to do.
10-3 Strategies for Saving and Investing
Slide 1210-3 Strategies for Saving and Investing
Investment tracking involves making investment choices by following stock prices over time.
Slide 1310-3 Strategies for Saving and Investing
Slide 1410-3 Strategies for Saving and Investing
• A bull market exists when stock prices are steadily increasing.
• A bear market exists when prices are steadily decreasing.
• Economic conditions (growth or decline) can affect investment strategies.
Slide 15
Dollar-Cost AveragingThe systematic purchase of an equal dollar amount of the same stock at regular intervals
10-3 Strategies for Saving and Investing