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  1. 1. Investing Stocks, bonds, index funds, Roth IRA’s and 401(k)
  2. 2. question of the day • What 1996 sequel of a sequel grossed $255 million less than the original? • It featured a different actor for the main character than the first two. • Home Alone 3.
  3. 3. entrance ticket • list 5 things you know about the stock market.
  4. 4. top 6 reasons high school students think you should invest 1. “make some money” 2. retirement 3. bragging rights 4. tax breaks 5. cash flow/real estate 6. for children’s college Source: invest/comment-page-1/
  5. 5. the stock market: history • first company to issue shares of stock after the Middle Ages was the Dutch East India Company in 1606. • allowed production of expensive goods (i.e. ships) to be completed by individuals and not just governments.
  6. 6. the stock market: purpose • a company sells stock (ownership) to raise capital (money). • the stock market provides an arena for people to buy & sell stocks. • A company sells the stock one time, the rest is trading.
  7. 7. what does it mean to own stock? • owning stock means you have a stake in the ownership of the company. • you are entitled to a portion of the profits. • you have voting rights in company decisions.
  8. 8. what is going on?
  9. 9. other investment options? • investing = putting your money somewhere you have a chance to make more money. • varying degrees of risk. • why not just keep your cash in a shoebox under your bed?
  10. 10. index funds • What are they? – Mutual fund that tracks the entire stock market • Low risk – Risk is spread out across a huge number of companies. • Low maintenance fees = more money for you.
  11. 11. bonds • What is it? – An IOU from a company or government that promises to pay you back what you paid + interest after a certain amount of time. • Companies do it to raise money. • Stocks = equity, bond owners = creditors.
  12. 12. 401(k) and Roth IRA • Retirement accounts • “Buckets” for other investments • Tax benefits • 401(k) = possible “free money” if your employer matches.
  13. 13. today’s take away message • the stock market is one place you can invest your money. • index funds are probably the best way to invest in stocks. • bonds are relatively secure places to put your money. • larger the risk, larger the return.
  14. 14. exit ticket: review quiz 1. To own stock means that… a.) You have an ownership claim. b.) You are entitled to some of the company’s profits. c.) You are investing your money. d.) All of the above.
  15. 15. 2. A company sells stock to… a.) Unload unprofitable assets. b.) Raise capital. c.) Only the executives of the company. d.) Consolidate ownership among a few people.
  16. 16. 3. The New York Stock Exchange… a.) is an example of a large auction floor. b.) is a new phenomenon. c.) is where people go to open bank accounts. d.) is actually located in New Jersey.
  17. 17. 4. The higher the risk involved with the investment, the _________ the likely return. a.) higher b.) lower c.) likely return is unaffected by risk.
  18. 18. 5. Which type of investment has the lowest risk? a.) Junk bonds. b.) Stock. c.) Bonds. d.) Day trading.
  19. 19. 6. Index funds are…. a.) A mutual fund made up of stock from across the stock market. b.) A single group of stock from the same company. c.) Very risky investments. d.) Only bought by very experienced investors.
  20. 20. 7. Bonds are… a.) A loan to a government, company, or municipality. b.) Relatively secure investments. c.) Repaid with interest. d.) All of the above.
  21. 21. 8. 401(k)’s and Roth IRA’s differ from stocks and bonds in that… a.) They are extremely risky. b.) They provide very high returns. c.) Are actually just “buckets” that hold other types of investments. d.) None of the above.