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Movie 3

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Movie 3

  1. 1. Key Concepts of Saving and Investing<br />How to Save for Your Future<br />
  2. 2. Key Concepts of Saving & Investing<br />Key #1: Pay yourself first <br />Key #2: Set goals that will inspire success<br />Key #3: Don’t take unnecessary risks<br />Key #4: Put time to work for you<br />Key #5: Diversify…Diversify…Diversify<br />
  3. 3. Key Concepts of Saving & Investing<br />Key #1: Pay yourself firstMake investing a habit.<br />$5,000<br />$5,000<br />$5,000<br />Initial balance<br />Interest per year<br />2.16%<br /> 8%<br />10%<br />Deposit per month<br />$0<br />$380<br />$279<br />Number of years<br />20<br />20<br />20<br />Future Value<br />$7,699<br />$250,000<br />$250,000<br />
  4. 4. Key Concepts of Saving & Investing<br />Key #2: Set goals that will inspire success<br />
  5. 5. Setting SMART Financial Goals<br />Specific<br />Time Limit<br />Relevant<br />Measurable<br />Attainable<br />Short-Term Goals = Within one year<br />Medium-Term Goals = Within next 2-5 years<br />Long-Term Goals = More than 5 years from now<br />
  6. 6. Key Concepts of Saving & Investing<br />Saving and investing choices for different types of goals:<br />Short-term goals<br />Certificates of Deposit<br />Money Market Funds<br />Medium-term goals<br />Longer-term Certificates of Deposit<br />Targeted Bonds<br /><ul><li>Long-term goals
  7. 7. Equity Mutual Funds
  8. 8. Corporate Stocks
  9. 9. Long-term corporate/government bonds
  10. 10. IRAs, 401(k)s, Keogh, 403(b)s</li></li></ul><li>Key Concepts of Saving & Investing<br />Key #3: Don’t take unnecessary risks<br /> Risk – the chance you take that all or part of the money put into an investment can be lost<br />
  11. 11. Key Concepts of Saving & Investing<br />How much risk is right?<br /><ul><li>The bigger the risk is, the bigger the potential payoff</li></ul> BUT<br /><ul><li> The bigger the potential payoff, the bigger the risk</li></li></ul><li>Key Concepts of Saving & Investing<br />Key #4: Put time to work for you<br />Compound interest – the interest earned on principal plus previously accrued interest<br />Time Value of Money – consumers generally prefer a dollar today more than a dollar in the future. If we have to wait, they have to pay us.<br />RULE OF 72: <br /> 72 = Number of years for money <br /> Interest Rate to double in value<br /> Example: 72/6 = 12 years<br />
  12. 12. Long-Run Cumulative Wealth<br />Diversification Is Key<br />
  13. 13. Key Concepts of Saving & Investing<br />Key #5: Diversify…Diversify…Diversify<br />“Never put all your eggs in one basket…”<br />
  14. 14. No one knows the future: Diversify<br />
  15. 15. Safeguard Your Savings<br />This presentation is made possible by:<br />Missouri Secretary of StateRobin Carnahan<br />www.investorprotection.org <br />

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