Savings and Investing

1. Financial Education and Training Institute Savings and Investing Linda JekelDir. Credit Unions Jeremy LusheneEducation & Outreach Department of Financial Institutions (www.dfi.wa.gov)

2. Discussion • Savings and Investing Overview • Why Teach Saving and Investing? • Key Concepts to Introduce • Resources and Activity Ideas

4. Key Savings Concepts • Pay Yourself First • Set Goals • Put Time to Work for You

5. Wants And Needs • In order to decide how to spend and save – identify wants vs needs • Every age can decide what is really important, has lasting value, and how to save.

6. Plug The Leak…What Want Could You CutBack On?

7. Emergency Savings • 3-6 Months Worth of Living Expenses • Recession? 6 Months • Accounts Should Be Liquid

8. Liquidity Things to think about: • How Easy Is It To Get To Money? • Are There Penalty's?

9. Compound Interest • Interest On Your Interest • Daily, Weekly, Monthly,Quarterly, Yearly

10. Types of Savings • Savings Accounts • Money Market Accounts • Certificate of Deposits

11. Traditional Savings Accounts • Account That Earns Interest (1.22% Avg) • Typically Liquid • Shop Around For Rates

12. Money Market Accounts • Usually Pay Higher Interest • Usually Higher Minimum Balance • Limited # Of Withdrawals (3-6 Month)

13. Certificate Of Deposits • Deposit A Specific Amount Of Money For A Specific Amount Of Time • Higher Interest Than Traditional Savings • Usually Penalty If You Withdraw Early

14. Where Would You Store Your Money • For Emergency Savings? • Down Payment For A Car You Plan To Buy In 6 Months? • For A Vacation You Are Saving For?

15. Keys To Savings Success • Pay Yourself First • Choose Accounts That Meet Your Goals • Keep Emergency Savings • Review Goals and Adjust As Necessary

16. Why Teach Savings? • May Not Be Taught At Home • Students Have Ambitious Goals • Time Is On Their Side • Disposable Income • Help Develop Lifelong Habit

17. 5 Savings Concepts Students Should Understand

18. The 5 Concepts… • Wants vs Needs • Emergencies Happen • Goals Can Be Achieved (Budget) • Time Is On Their Side (Compound) • Pay Self First

19. How To Grab Students Attention About Saving Show Them That Time Is Ticking

20. Time Value of Money

21. How To Grab Their Attention…

22. How To Grab Their Attention… Spending Leaks

23. Spending Leaks Jeremy’s Daily Leaks At Age 17 Non-fat Vanilla Latte ($4) 3 Otis-Spunkmeyer Cookies ($1) Dr. Pepper ($1) Gas for multiple trips to friends ($3) Total ($9)

24. That’s $1,620 For TheSchool Year!

25. Mac Book Roth IRA Textbooks Vacation

26. What’s It Take To BeA Millionaire?

27. Resources for the Classroom

28. Curriculum • Money Savvy Kids (K-12) • Moonjar (K-5) • FEPPP (www.feppp.org) • Right on the Money

29. Organizations • Local Bank or Credit Union • Jump$tart • Junior Achievement • FEPPP

30. Investing

31. What Would You CutIf You Made Only $18,000 A Year?

32. $18,000 A Year • $1,200 (month social security) • Plus 4% of a $100,000 401K • Retirement isn’t cheap!

33. Secrets To Investing Success • Know What You Are Investing For • Stay The Course (Real Loss) • Review Your Portfolio – Adjust To Goals • Know Your Risk Tolerance

34. Types of Investments • Stocks • Mutual Funds • Bonds

35. Stocks • Partial Ownership In A Company • Sold On Stock Market • Dividends • Stocks Carry Risk • Never Put All Eggs In One Basket • Diversification

36. Bonds • Loaning Money To Company Or Govt. (IOU) • Money Is Repaid + Interest • Many Types Of Bonds Exist • Short Term, Long Term, Govt. • If Held Through Maturity, Investor Receives Face Value Of Bond. • Generally, Less Risky Than Stocks

37. Mutual Funds • Professionally Managed Pools Of Money • Many Investors • Contain Various Types Of Investments • Instant Diversification • Ask For Prospectus • Contains Fund Objectives • Most Require Minimum Investment • Some As Low As $250

38. What Would You Do? You’re 25. You have an extra $5,000 to invest. Would you choose a stock with high risk, medium risk, low risk? Why?

39. Risk vs Return • What You Need To Know: • All Investments Have Some Degree Of Risk • Interest Rate Risk • Inflation • Business Failure

40. Diversification • Never a good idea to keep all eggs in one basket. • Work with a financial planner to keep your investments diversified.

41. Pyramid Group Activity

42. Investment Risk • See quiz handout • Choose a partner & answer questions 1 & 3 • Decide what level of risk (low, moderate, or high) • Decide what level of time (short, moderate, or long)

43. Raise Your Hand If…

44. Protect Yourself • Read Prospectus Carefully • Make Sure Investments Are Registered • www.dfi.wa.gov or www.finra.org • Make Sure Professional Is Licensed • Stay Up To Speed On Common Scams

45. Concepts Students Should Understand • Again… Time Is On Their Side • Goals Are Achievable With A Plan • Diversification • Risk Tolerance

46. How To Grab Their Attention

47. How To Grab Their Attention

48. Resources • Investor Education 2020 • Investor Edu. In Your Community • Kiplinger Booklets • NASAA/DFI

49. Resources Continued • FINRA • Stock Market Game • Money Track Videos • Fraud Scene Investigator

50. Jeremy Lushene Education and Outreach Phone: (360) 902-0506 Email: jlushene@dfi.wa.gov Linda Jekel Director of Credit Unions Phone: (360) 902-8778 Email: LJekel@dfi.wa.gov Contact Us! Web Sitewww.dfi.wa.gov/financial-education/