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H65

T009-04.01. Savings and Investments. 9.04 Analyze the factors that affect the rate of return on a given savings or investment plan and calculate the rate of return. H65. T009-04.02. Savings Plan. Putting money aside in a systematic order. Ways to put money aside: Regular deposit

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H65

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  1. T009-04.01 Savings and Investments 9.04 Analyze the factors that affect the rate of return on a given savings or investment plan and calculate the rate of return. H65

  2. T009-04.02 Savings Plan • Putting money aside in a systematic order. • Ways to put money aside: • Regular deposit • Automatic deposit • Electronic funds transfer H66

  3. T009-04.03 Starting a Program • Factors determining a program • Safety • Assurance that the money you have invested will be returned to you. • Liquidity • Ease with which an investment can be changed into cash without losing any of its value. • Yield • Rate of return (percentage of interest that will be added to you r savings over a period of time). • Diversification • Process of spreading your assets among several different types of investments to lessen risk. H67

  4. T009-04.04 Factors That Affect the Rate of Return on an Investment • Risk - Chance of loss. • Rate of Return (yield) • Amount of money the investment earns. • Compounding frequency is the interest computed on the amount saved plus the interest previously earned. • Liquidity • Ease with which an investment can be changed into cash. • Resistance to inflation • Will rate of return keep up with inflation? • Tax considerations H68

  5. T009-04.05 Factors that Affect the Selection of Financial Institutions • Services offered • Business hours • Location • On line services H69

  6. T009-04.06 Financial Security Investments(low risk) • Cash • Savings Accounts • Money Market Accounts • Certificate of Deposit • US Government Bonds • Retirement Accounts H70

  7. T009-04.07 Safety and Income Investments • US Treasury Securities • Conservative Corporate Bonds • State and Municipal Bonds • Income and Utility Stocks H71

  8. T009-04.08 Growth Investments • Income and Growth Stocks • Mutual Funds • Real Estate • Convertible Bonds H72

  9. T009-04.09 Speculation Investments(high risk) • Options • Commodities • Precious Metals and Gems • Speculative Stocks • Junk Bonds • Collectibles H73

  10. T009-04.10 Calculating Rate of Return • Rate of Return = Total Interest Earned divide by Original Deposit • Example: • If you deposited $100 in account that paid $6.18 interest for one year. What is the rate of return? • $6.18/$100 = .0618 = 6.18% H74

  11. T009-05.01 Savings and Investments 9.05 Analyze how saving and investing influences economic growth. H85

  12. T009-05.02 Savings and Economic Growth • Individual savings allow: • Businesses to expand and create more jobs. • Demand for goods and services to increase. • Failure to save will cause less money to be invested and the economy may slow as a result. • Savings contribute to our economic stability • Government uses savings to build highways, schools, and public services H86

  13. T009-06.01 Savings and Investments 9.06 Describe wills and other legal documents. H89

  14. T009-06.02 Wills • Legal document that specifies how you want your property to be distributed after your death. • Intestate • Die without a legal will • State will step in and control the distribution of your estate. • Probate • Legal procedure of proving a will to be valid or invalid. H90

  15. T009-06.03 Wills • Simple Will • Leaves everything to your spouse • Formal Will • Prepared by an attorney. • Holographic Will • Handwritten will that you prepare yourself • Needs to be written, dated, and signed entirely in your own handwriting. H91

  16. T009-06.04 Other Legal Documents • Trusts • Legal arrangement that helps manage the assets of your estate for you benefit or that of your beneficiaries. • Living Will • Document in which you state whether you want to be kept alive by artificial means if you become terminally ill and unable to make such a decision. • Power of Attorney • Legal document that authorizes someone to act on your behalf. H92

  17. T009-06.05 GuardianPerson who accepts the responsibility of: 1. Providing children with personal care after their parents’ death 2. Managing the parents’ estate for the children until they reach a certain age H93

  18. T009-07.01 Savings and Investments 9.07 Explain how agencies regulate financial markets and protect investors. H98

  19. T009-07.02 Regulators • Securities and Exchange Commission (www.sec.gov) • Protect investors and maintain the integrity of the securities markets. H99

  20. T009-07.03 Regulators • NASD (www.nasd.com) • Registers member firms, writes rules to govern their behavior, examines them for compliance and disciplines those that fail to comply. • Largest private sector provider of financial regulatory services. • Has helped bring integrity to the markets and confidence in investors. H100

  21. T009-07.04 Protecting Investors • Department of the Secretary of State (www.secretary.state.nc.us /sec ) • State Securities Laws • Known as “blue sky” laws • Intent of laws is to protect the investing public by requiring a satisfactory investigation of both the people who offer securities as investments and of the securities themselves. • Securities division addresses investor complaints concerning securities brokers and dealers , investment advisers and commodity dealers as well as complaints about offerings of particular investment vehicles. H101

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