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E High School Financial Planning Program E High School Financial Planning Program Three – Investing: Making Money Work for You Investing: Making Money Work for You NORTH DAKOTA PERSONAL FINANCE EDUCATION

Investing: Making Money Work for You

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Investing: Making Money Work for You. NORTH DAKOTA PERSONAL FINANCE EDUCATION. Savings and Investments. Unique Investment Features. Unique Savings Features. Common Features. What are some features common to both investments and savings?. 72. Years Needed to Double Investment. =. - PowerPoint PPT Presentation

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Page 1: Investing: Making Money Work for You

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

Page 2: Investing: Making Money Work for You

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?

Page 3: Investing: Making Money Work for You

Rule of 72

72Interest Rate

=Years Needed to

Double Investment

72 Interest RateRequired=

Years Needed toDouble Investment

Page 4: Investing: Making Money Work for You

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

Page 5: Investing: Making Money Work for You

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

Page 6: Investing: Making Money Work for You

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

Page 7: Investing: Making Money Work for You

NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit Three – Investing: Making Money Work for You

Investment Options

Page 8: Investing: Making Money Work for You

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

Page 9: Investing: Making Money Work for You

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

Page 10: Investing: Making Money Work for You

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

Page 11: Investing: Making Money Work for You

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

Page 12: Investing: Making Money Work for You

NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit Three – Investing: Making Money Work for You

Ready Set

GoReady Set

Go