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Bellringer
You don’t have to write
this down:
1.How old will you be
in 2061?
2.Do you think
$13/hour is a lot of
money?
3....
10 richest people in the World
Forbes (2012)
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

Carlos Slim Helú $69 B
Bill Gates
Warren Buff...
Credit Cards
• Loan from the
bank
• High interest
rates
• Keep control

• Bankruptcy
• Video clip
Chances are….
Only 3% of the US earns
over $250,000/year
You will work
You will have a limited
supply of wealth
You will n...
Do you want to be?
• Rich & Retired

Social Security
Specifics about investing
• Opportunity cost of
investing?
• Things to consider:
– Liquidity
– Risk
– Diversify
Liquidity
• “How easy is it to turn this investment into
cash”?
Cash under mattress
•
•
•
•

Bad idea, why?
No return, risky
100% liquid
Inflation, you will
lose the inflation
rate
Savings Account
• Low interest rate
• No risk in USA
• Today: 1%, yuck! Money Market Acct 3-3.5 %
Pension Plan
• Employee plan
• Usually union or large
firm
• For example: 10% from
State employees, 80% of
salary when you...
Bonds
• Issued by
government or
large corporation
• Low risk, low
return
• Must wait for
maturity
• Can be traded
(liquidi...
Mutual Funds
• Managed stocks
• Lower risk, lower
control
• Some sort of
theme
• Saves you time
Traditional IRA
• Individual
Retirement Account
• You have to set it up
• You can deposit up
to $5000 per year
• (into mut...
Roth IRA
• Individual
Retirement Account
• You have to set it up
• You can deposit up
to $5000 per year
• (into mutual fun...
401 K Plan
• Set up by employer
• Payroll deduction
• Invested into stock
market
• Lowers tax incidence
• Tax break for
em...
Investment calculator
Real Estate
•
•
•
•

Risky, high capital
Relatively liquid
Speculation
Average real estate in
Tucson in 1970
$23,000
• Ave...
International Markets
• Invest in
foreign
markets
• Invest in
currency
• Can be very
risky
• George
Soros
List by liquidity
•
•
•
•
•
•
•
•
•

Traditional IRA
Roth IRA
401 K
Real Estate
Stocks
Mutual Funds
Int’l currency
Pension...
List by risk
•
•
•
•
•
•
•
•
•

Traditional IRA
Roth IRA
401 K
Real Estate
Stocks
Mutual Funds
Int’l currency
Pension plan...
Finance Closure on your BR
401K plan
2
2

Trad. IRA

1
2

Roth IRA
Finance
Finance
Finance
Finance
Finance
Finance
Finance
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Finance

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Transcript of "Finance"

  1. 1. Bellringer You don’t have to write this down: 1.How old will you be in 2061? 2.Do you think $13/hour is a lot of money? 3.Get out your notes
  2. 2. 10 richest people in the World Forbes (2012) 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Carlos Slim Helú $69 B Bill Gates Warren Buffett Bernard Arnault Amancio Ortega Larry Ellison 2, 3, 6 Eike Batista Stefan Persson Li Ka-shing Karl Albrecht 8 1 4 5 9 7 10
  3. 3. Credit Cards • Loan from the bank • High interest rates • Keep control • Bankruptcy • Video clip
  4. 4. Chances are…. Only 3% of the US earns over $250,000/year You will work You will have a limited supply of wealth You will need to think about your income and make good choices You need a budget You need to think about investing
  5. 5. Do you want to be? • Rich & Retired Social Security
  6. 6. Specifics about investing • Opportunity cost of investing? • Things to consider: – Liquidity – Risk – Diversify
  7. 7. Liquidity • “How easy is it to turn this investment into cash”?
  8. 8. Cash under mattress • • • • Bad idea, why? No return, risky 100% liquid Inflation, you will lose the inflation rate
  9. 9. Savings Account • Low interest rate • No risk in USA • Today: 1%, yuck! Money Market Acct 3-3.5 %
  10. 10. Pension Plan • Employee plan • Usually union or large firm • For example: 10% from State employees, 80% of salary when you retire, after 30+ years • Not liquid at all • Low risk, long term
  11. 11. Bonds • Issued by government or large corporation • Low risk, low return • Must wait for maturity • Can be traded (liquidity!!) • WW1 & WW2 War Bonds
  12. 12. Mutual Funds • Managed stocks • Lower risk, lower control • Some sort of theme • Saves you time
  13. 13. Traditional IRA • Individual Retirement Account • You have to set it up • You can deposit up to $5000 per year • (into mutual funds, stocks or bonds) • Tax loopholes (breaks) • Can’t touch until 60 • Not liquid At 10% interest, a $5000 IRA becomes $226,000 over 40 years! $10,000 is over $400,000!
  14. 14. Roth IRA • Individual Retirement Account • You have to set it up • You can deposit up to $5000 per year • (into mutual funds, stocks or bonds) • No tax break, but tax free when you retire • Can’t touch until 60 • Not liquid At 10% interest, a $5000 IRA becomes $226,000 over 40 years! $10,000 is over $400,000!
  15. 15. 401 K Plan • Set up by employer • Payroll deduction • Invested into stock market • Lowers tax incidence • Tax break for employee • Employee match • Not liquid
  16. 16. Investment calculator
  17. 17. Real Estate • • • • Risky, high capital Relatively liquid Speculation Average real estate in Tucson in 1970 $23,000 • Average real estate in Tucson in 2008 $161,000!!!
  18. 18. International Markets • Invest in foreign markets • Invest in currency • Can be very risky • George Soros
  19. 19. List by liquidity • • • • • • • • • Traditional IRA Roth IRA 401 K Real Estate Stocks Mutual Funds Int’l currency Pension plan bonds
  20. 20. List by risk • • • • • • • • • Traditional IRA Roth IRA 401 K Real Estate Stocks Mutual Funds Int’l currency Pension plan bonds
  21. 21. Finance Closure on your BR 401K plan 2 2 Trad. IRA 1 2 Roth IRA
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