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Play, Learn, and Have Fun!

Play, Learn, and Have Fun!. Saving is a very fine thing. Especially when your parents do it for you. --Sir Winston Churchill. Do your students have economic and financial l iteracy …. Do You Need a Reason to Save for Retirement?.

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Play, Learn, and Have Fun!

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  1. Play, Learn, and Have Fun! Georgia Council on Economic Education w w w . g c e e . o r g

  2. Saving is a very fine thing. Especially when your parents do it for you.--Sir Winston Churchill Georgia Council on Economic Education w w w . g c e e . o r g

  3. Do your students have economic and financial literacy… Georgia Council on Economic Education w w w . g c e e . o r g

  4. Do You Need a Reason to Save for Retirement? Georgia Council on Economic Education w w w . g c e e . o r g

  5. About 8 of 10 Americans are comfortable with the level of financial planning they are currently doing. Source: Federal Reserve Bank, St. Louis Georgia Council on Economic Education w w w . g c e e . o r g

  6. 34% have not begun to prepare for retirement. 23% save nothing for long term goals. 25% do not know how much they are saving. Georgia Council on Economic Education w w w . g c e e . o r g

  7. How to Really Be a MillionaireLesson 1 Georgia Council on Economic Education w w w . g c e e . o r g

  8. Most millionaires are college graduates. • True: 4 of 5 millionaires are college graduates. • 2. A majority of millionaires work fewer than 40 hours a week. • False: About 2/3 of millionaires work 45 to 55 hours a week. • 3. More than half of all millionaires never received money from a trust fund or estate. • True: Only 19 % of millionaires received any income or wealth of any kind from a trust fund or an estate. The Millionaire Game Georgia Council on Economic Education w w w . g c e e . o r g

  9. The Millionaire Game • 4. More millionaires drives Fords than Cadillacs. • True: Ford is preferred by 9.4% and Cadillac by 8.8 %. Georgia Council on Economic Education w w w . g c e e . o r g

  10. 5. Most millionaires work in glamorous jobs such as sports, entertainment, or high tech. • False:A majority of millionaires are in ordinary industries and jobs. 6. Most millionaires work for big Fortune 500 companies. False: About 3 out of 4 millionaires are self employed and consider themselves to be entrepreneurs. Most of the others are professionals, such as doctors, accountants and lawyers. The Millionaire Game Georgia Council on Economic Education w ww . g c e e . o r g

  11. 7. Many poor people become millionaires by winning the lottery. False: Very few people get rich the easy way. If you play the lottery, the chances of winning are about 1 in 12 million. The average person who plays the lottery every day would have to live about 33,000 years to win once. You have a 1 in 66,000 chance of being struck by lightning IN FLORIDA A pregnant woman has a 1 in 705, 000 chance of have quadruplets The Millionaire Game Georgia Council on Economic Education w ww . g c e e . o r g

  12. The Millionaire Game 8. College graduates earn about 65% more than high school graduates. True: recently the average college grad earned 66% more than the average high school grad. Folks with professional degrees earned 150% more than the HS grad. 9. If an 18 year old H.S. graduate spends as much as a H.S. dropout until both are 67 years old, but the HS graduate invests the difference in his or her earnings at 8% annual interest, the high school graduate would have $5,500,000. True: This is a dramatic illustration the value of a high school education and investing early and over a long period. The difference in earnings is $8k a year at age 18 and assumes a 1.5% increase in income per year. Georgia Council on Economic Education w w w . g c e e . o r g

  13. 10. Day traders usually beat the stock market and many become millionaires. False: Recent studies show that about 80% of day traders lose money. 11. If you want to be a millionaire avoid the risky stock market. False: Long term, the S&P 500 index has increased at more than 10 % annually which exceeds any other investment. The Millionaire Game Georgia Council on Economic Education w w w . g c e e . o r g

  14. 12. At age 18, you decide not to smoke and save $1.50 a day……..At age 67, your savings are worth almost $300,000. True: the power of compound interest. Small and steady investments make a big difference over time. 13. If you save $2000 per year from age 22 to age 65 at 8% annual interest, your savings will be over $700,000 at age 65. True: Because of compound interest, the earlier you begin saving the better. Regular saving will make you a millionaire even if your salary is modest. The Millionaire Game Georgia Council on Economic Education w w w . g c e e . o r g

  15. 14. Single people are more often millionaires than married people. False: Most millionaires are married and stay married. Financially speaking, divorce is something you want to avoid. The Millionaire Game Georgia Council on Economic Education w w w . g c e e . o r g

  16. Get a good education • Work long, hard, and smart • Learn money-management skills • Live below your means • Buy a home (you can afford) • Save early and often • Invest in common • stocks for the • long term (diversify) • Gather information • before making • decisions • Get married and stay • married Rules for Improving Your Financial Life Georgia Council on Economic Education w ww . g c e e . o r g

  17. Georgia Council on Economic Education w w w . g c e e . o r g

  18. Stock-An ownership share, or shares of ownership, in a corporation. The Basics Georgia Council on Economic Education w w w . g c e e . o r g

  19. Can You Buy Stock in these companies? or Georgia Council on Economic Education w w w . g c e e . o r g

  20. New York Stock Exchange The oldest stock exchange in the United States, founded in 1792 and stocks are still traded on the floor. Traditionally for large corporations with large volumes of shares. The Different Markets Georgia Council on Economic Education w w w . g c e e . o r g

  21. NASDAQ An electronic marketplace enabling buyers and sellers to get together via computer to trade stocks. Traditionally high-tech firms that are very active. Created in 1971. Georgia Council on Economic Education w w w . g c e e . o r g

  22. American Stock Exchange (AMEX) Located in New York, handles about 10% of all securities exchange. Has mostly small-cap stocks, exchange-traded funds and derivatives. Georgia Council on Economic Education w w w . g c e e . o r g

  23. Managed funds-a trained manager invests for clients by a company, often involving a combination of fixed-interest and property investments at the discretion of the fund managers. The manager gets big bonuses if his funds have great earnings. • Index funds-fund, as a mutual fund or pension fund, with a portfolio that contains many of the securities listed in a major stock index in order to match the performance of the stock market generally. Funds are randomly selected and are usually the same as the Standard and Poors (S & P) values. Two Kinds of Funds Georgia Council on Economic Education w w w . g c e e . o r g

  24. $7.00 per team fee • No fee if you are a Title 1 school • No fee for any school in Atlanta City, Decatur City, Fulton County, DeKalb County • Teams of 3-5 students (suggested) Teaching “Stuff” Georgia Council on Economic Education w w w . g c e e . o r g

  25. $100,000 to Invest for 10 Weeks • NYSE • AMEX • NASDAQ • Must Purchase Minimum of 100 Shares • Minimum Share Price of $5 • 4 pm Closing Price (not real-time) National Rules Georgia Council on Economic Education w w w . g c e e . o r g

  26. Purchase a stock before end of third week • Must purchase at least three stocks • Must hold three stocks for 3 weeks Georgia 3x3x3 Rules Georgia Council on Economic Education w w w . g c e e . o r g

  27. Highest Portfolio Value (total Equity) • Regional Winners – school districts • Carroll Co. - Carrollton City – Independent • Students get T-Shirts • Go to Atlanta (underground) winners lunch State Winner Team Trophy Teacher gets week in NYC Winning Team Georgia Council on Economic Education w w w . g c e e . o r g

  28. January 30 to April 6 • Real World never invest for just 10 weeks • Strategy to win the game: • Buy low cost & highly volatile stocks (Not a strategy for retirement or LT investing) Invest for 10 Weeks Georgia Council on Economic Education w w w . g c e e . o r g

  29. Student- “What stock should I buy?” Me- “If I knew the answer to that I would not be in this classroom with you. I would be living here and paying someone to count my money.” Georgia Council on Economic Education w w w . g c e e . o r g

  30. Georgia Council on Economic Education w w w . g c e e . o r g

  31. Teams of 3-5 (recommend friends) • Do not liquidate portfolio on the last day • Rankings posted weekly • Awards by region and state – luncheon for all winners in May Important Info: Georgia Council on Economic Education w w w . g c e e . o r g

  32. Select stock kids are familiar with; NIKE • Buy at $100/share • 1000 shares with $100,000 • Price rises to $102/share • Account increases by $2,000 • Select stock with a lot of volatility; XYZ • Buy at $10/share • 10,000 shares with with 100,000 • Price rises to $12/share • Account increases by $20,000 Ok Idea: Better Idea: How to Play- 2 Ideas Georgia Council on Economic Education w w w . g c e e . o r g

  33. For Teachers (gcee.org) • Teacher Support Center • FAQ – need 1 computer in room • View Teacher Classroom Experience • Grading Tip - Photo of each Team - • - rank on wall by P.V. • If Something Goes Wrong • Call Barbara Futrell 404-413-7820 or • 1-877-752-9764gcebah@langate.gsu.edu Georgia Council on Economic Education w w w . g c e e . o r g

  34. Buy ↑ Sell [Long position] • Short Sell ↓ Short Cover [Short position] SMG Georgia Council on Economic Education w w w . g c e e . o r g

  35. Your friend loans you this- Georgia Council on Economic Education w w w . g c e e . o r g

  36. You immediately turn around and sell the thing for $200.00. (the $200.00 goes in your pocket) Georgia Council on Economic Education w w w . g c e e . o r g

  37. What do you owe your friend at this point? Georgia Council on Economic Education w w w . g c e e . o r g

  38. Georgia Council on Economic Education w w w . g c e e . o r g

  39. You expect leather briefcases to be on clearance sale at Macy’s for $150.00 Georgia Council on Economic Education w w w . g c e e . o r g

  40. When they go on sale, you buy your friend a new briefcase for $150.00. She gets her briefcase back and you just made $50.00! Georgia Council on Economic Education w w w . g c e e . o r g

  41. Your broker loans you this- Georgia Council on Economic Education w w w . g c e e . o r g

  42. You immediately turn around and sell it for $70/share x 100 shares or $7,000 (the $7,000 goes in your pocket) Georgia Council on Economic Education w w w . g c e e . o r g

  43. What do you owe your broker at this point? Georgia Council on Economic Education w w w . g c e e . o r g

  44. Georgia Council on Economic Education w w w . g c e e . o r g

  45. You expect the CDC to announce that Coke causescancer… …so you wait. (if the price goes down, you can buy it back at a CHEAP price and make $$$) Georgia Council on Economic Education w w w . g c e e . o r g

  46. Instead, the CDC announces that Coke cures cancer! What happens to the price of Coke stock? Maybe goes up to $200/share Georgia Council on Economic Education w w w . g c e e . o r g

  47. If the price of the stock goes up before you return the stock to your broker, you will lose money. (must buy back at $200/share Therefore lose $130/share) The Risk of Short Selling? Georgia Council on Economic Education w w w . g c e e . o r g

  48. So, selling short is risky, but you can make a lot of money. • You decide if it is worth it! Short selling… is it worth it? Georgia Council on Economic Education w w w . g c e e . o r g

  49. *You may spend more money if you BUY ON THE MARGIN. That means you may borrow money to buy stock. Pros * The only way to win the SMG is to win a lot of money. This is the best way to do it. You’re trying to double your money. Cons • If the stocks you bought go down in value, you’re in trouble. • Your lender will FORCE you to sell your stock. • If you don’t sell it, your lender will sell it for you . Buy on Margin Georgia Council on Economic Education w w w . g c e e . o r g

  50. Initial Margin is 50% Margin = Portfolio Value (PV) – Loan (L) Margin/PV = margin as a % of PV = 50% • Ex. 200,000 PVporfolio value PV – L >= .50 - 100,000 loan PV 100,000 margin L <= .50 PV PV = Stock + Cash Buy on Margin Georgia Council on Economic Education w w w . g c e e . o r g

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