2. AGENDA
1. Introductions
2. Post Secondary Funding
-OSAP, RESP’s, line of credit, scholarships, etc.
3. Personal Savings & Banking
4. Personal Investing : The Basics
5. High School Investopedia Portfolio Simulation
6. Q&A
3. INTRODUCTION
Presenter 1 Presenter 2
B.Comm, 2nd year
Queen’s School of
Business
4. POST SECONDARY FUNDING
Ontario Student Assistance Program (OSAP)
Registered Education Savings Plan (RESP)
Student Line of Credit
Student Employment
Scholarships & Bursaries
Budgeting
5. ONTARIO STUDENT ASSISTANCE PROGRAM (OSAP)
OSAP is a government-funding loan program
designed to aid full-time students
OSAP is based on financial need, so an
application is required
Anyone is eligible to apply, but your need will be
evaluated on the basis of:
-your parent’s income
-the post-secondary program in question, etc.
OSAP loans can be used to fund tuition, textbooks,
living expenses, etc.
see http://osap.gov.on.ca for details
6. REGISTERED EDUCATION SAVINGS PLAN (RESP)
A tax-deductible savings account that is
contributed to by subscribers over a number of
years
Distributed via educational assistance payments
(EAP’s) at intervals over student’s education
STUDENT LINE OF CREDIT
Taken out with your banking institution
7. STUDENT EMPLOYMENT
Typical Part-Time Jobs
Tim Hortons
McDonald’s
Contracting
Telemarketing
Retail
SCHOLARSHIPS & BURSARIES
Bursaries are need-based
Scholarships are for academic, athletic, or
other achievement
www.studentawards.com
8. PLANNING YOUR BUDGET
What is a budget? Most simply, a budget is a tool that can
help you manage your financial goals and objectives
1. Identify your needs
2. Identify sources & uses of funds
Where will you get money from, where will it be spent?
3. Set your budget assumptions
4. Set your time period
5. Plan your budget, implement & review
9. FIRST YEAR UNIVERSITY BUDGET
First year tuition: $8000
First year residence and meals: $9000
First year textbook and misc.: $1500
Total need: $18,500
Total savings: $2000
Total RESP: $5000
Total Scholarships and bursaries: $2500
Total need left: $9000
Parents/OSAP: $5000
Work ($10/hr, 20 hrs/week for 2.5 months): $2000
Student line of credit required: $2000
10. PERSONAL SAVINGS & BANKING
Stick with your youth account until you turn 19
When you are 18, apply for a credit card
build your credit rating responsibly to take advantage of lower future
interest rates
When you are 18, get a TFSA (Tax Free Savings Account)
If you have excess savings, put it in here!
Greater rates of interest
No tax on interest earnings
Do investments within a TFSA if you ever do any at all
About 3% interest, so I=PRN, with $1000 over 4 years, I=1000(0.03)(4),
which is $120.
11. INTRODUCTION TO INVESTING
How do investments make us money?
1. earn income or dividends from an investment while owning it.
2. earn profits or capital gains from selling an investment for more
than the amount you paid to purchase it
What do we consider when making investment decisions?
Time horizon
Risk tolerance
12. TYPES OF INVESTMENTS
Physical assets (ex. land, houses, art, etc.)
Money market instruments - less than 1 year
Treasury Bills (“T-Bills”, issued by the government)
Fixed Income Instruments debt claims
Guaranteed Investment Certificates (GIC) , Bonds, etc.
Equity Instruments ownership stake
Common shares, preferred shares
Other
Mutual funds, Exchange traded funds (ETF) , Derivatives
13. INTRODUCTION TO THE
INVESTOPEDIA STOCK PORTFOLIO SIMULATION
Join the Facebook group – SIFE Queen’s Simulation 2010
Remember, this is a trading competition, not necessarily an
investing competition
There will be cash prizes! Win up to $150!
Simulation will run from February 12 – April 9
Background information on school life/ approach from high school into university/ managing the transition phase/ where’s everyone heading?
Apply early and on time. Read carefully, some people who get OSAP and then their family income rises will have to report this information or risk interest rates or decreased loan terms. Ensure that your financial need is legitimate and predictable. Other than OSAP, almost all universities have need based bursaries that are easier to get and not necessarily given as a loan. Apply because many people don’t, but now many schools require you to apply to OSAP too, however if you don’t receive OSAP don’t be discouraged because many people can still get those bursaries after.
Your parents are more so responsible for maintaining an RESP, so if you are interested about it have a talk with your parents, but there is not much now that you can do with your own funds or efforts in developing an RESP. Student line’s of credit are possible, but should be somewhat of a last choice alternative if other sources cannot cover your costs of education. Rates with student lines of credit aren’t great and interest will need to be paid throughout your years of education.
Any work experience is better than no work experience and everyone starts off somewhere. Companies are looking for committed and hard working individuals with some experience, so don’t be afraid to take any jobs that might be available. That said, work your connections as well and do focus on your schoolwork if you find yourself trying to meet those high min. cutoffs at universities. There are many scholarships available: Loran, chancellors, RBC, TD, Wendy’s, etc. Some are very specific so if you meet the criteria, then only 5 people might qualify to apply, so if you aren’t the most stellar candidate do some research and search those out.
Perhaps do an interactive budget chart somewhere between this slide and the next, forecasting needed amounts for university and then planning out the number of hours of work required, scholarship amounts, etc. Do one on the board and get people from the class to fill it in based on their own needs.
This is just a generic budget, I know commerce students pay much more, but artscis pay less for example. In paying, you should first look at accessing your own savings, then the RESP, and then scholarships and bursaries before going to loans from OSAP or other sources and work. I put parents and OSAP together because some parents refuse to cover their children’s education or at least not all of it. (Take this slide off if its of no value)
I believe at all Canadian branches you can keep your youth account until you turn 19, so that there is no transaction fees. Afterwards, you will have to switch to a student account. Interest with a TFSA more than exceeds current inflation rates I believe and even if Canada is in a growth phase, it will still at least match inflation.
Risk tolerance encompasses a whole different amount of factors ranging from current economic conditions, future economic conditions, the industry, government policies, technologies, etc. Generally, long term investments are held for more than a year, and short term investments are held for less than a year.
Likely no one has the capabilities to buy a house at this age. Note that speculating on the eternal increase of housing prices led to the financial crisis. Also, housing prices in China are rising to dangerous levels because people are holding it for investment purposes, so there may be a chance of a bubble burst if people begin selling off these largely empty properties quickly. The way bonds and T-bills work is that the government may need money at the time and at the same time they try to decrease the amount of money supply in the open market, so they sell these bonds or bills that guarantee a small return at a later date along with interest over time. Bonds can extend a decade if need be, but they can be sold in the market during that time. T-bills and money market instruments generally aren’t traded as much. GICs are bank guarantees of payments with an interest rate at a later date if they need to increase their reserve rates. GICs usually extend updwards of five years. They are worth buying and locking in if one, you have no idea what to do with your money, and two, you expect interest rates to decrease. However, generally the banks are more knowledgeable, so as an investment GICs are generally only worth it if you have no clue what to do with your money since it guarantees an amount of interest at the end.
Holding stocks in this game may not be the best strategy. Again, basically trading is holding investments for the short term in hopes of capital gains, while investing is for the long term and expectations for dividends or saying power may be included.
Go to www.investopedia.com- Click on register free and complete registration as directed
Once you’ve register:Log-inSelect Simulator Tab – click on games
You will reach this screenClick – Join Game
Under Search Games – type in “sife simulation 2010”*Make sure you change the currency to “any” from the default USDClick on Search
Scroll down and click Join
Enter password:queensClick – Join Game
Congratulations! You have successfully joined SIFE Simulation 2010This is your portfolio page; notice the 3 major tabsStock Portfolio – which shows the value of your portfolioShorted Stock Portfolio – shows the value of your shorted stockLearning center – various resourcesEach section also has a link to tutorials to help you get started!
Scrolling down – you can the sections under the learning centerHere you can learn more about StocksOptions (if you want to)Shorted stocksThere is a help section as well!
Your home page compares the performance of your portfolio to an index (S&P 500)
To make a trade – simply click on the trade tab, which will bring you to this screenEnter the stock symbol – you can look up a company using the symbol lookup link beside the boxSelect the type of transaction you want to performEnter the quantity of stocks you wish to buy/sell/short…Click preview order… Also note, on the right side, Account details shows you the value of your portfolio; how much money you have to invest, as well as your buying power – In this game, you will each start off with $100,000; in both USD and CAD; you can buy stocks from multiple exchanges
Here you are able to preview your orderYou can either cancel it; change it or submit your order
If you submitted your order, it should bring to this screen, showing a trade confirmation
You are able to interact with other players in the game on investopedia, and can check messages my clicking on My Messages
The rankings page shows which player has the highest account value – those with the highest account values on April 9, 2010 will receive cash prizes up to $150!!You will be competing against high school students from other high schools in Kingston as well.