Tips and Tools For Financial Success - Newton Free Library

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IV. Saving and Investing Preparing to Invest: Introduction Savings Tips How your Money can Grow Risk-Return Relationship Table Compounding (with Tables) Investing in your Twenties Retirement Savings Vehicles Activities: Pay Yourself First Action Plan Savings Goals Worksheet Investment Terms and Definitions Investing Quiz with Answers Saving and Investing Online Resources Recommended Supplemental Materials: BOOKS 1. Freedman, Jeri. First Bank Account and First Investment Smarts, New York: Rosen Publishing, 2009. LIT 332.6 F87F 2. Furgang, Kathy. Real world economics: How the stock market works, New York: Rosen Pub., c2011. LIT 332.642 F96H 3. Goldie, Daniel C. The investment answer : learn to manage your money & protect your financial future, New York: Business Plus, 2011. LIT 332.6 G56I 4. Gough, Leo. How the stock market really works, New York: Financial Times Prentice Hall, c2011. LIT 332.632 G72H 5. Heath, Julia A. Personal finance essentials: Saving and investing, New York: Facts On File, c2012. LIT 332.024 P41H v4 6. Morrison, Jessica. Everyday Economics: Saving and Everyday Economics: Investing (two titles), New York, NY: Weigl Publishers, c2009. LIT 332.024 M83S and LIT 332.6 M83I 7. Pirie, Madsen. Economics made simple: how money, trade and markets really work, Petersfield, Hampshire: Harriman House Ltd, 2012. LIT 330 P66E VIDEOS 1. Personal finance: Saving strategies (No Brainers series, program 2). Cerebellum; Camarillo, CA, 2005. DVD ESL 332.024 P439.2 (26 Minutes) 2. Saving and investing (Personal finance Essentials series). New York: Meridian Education Corp., c2011. DVD ESL 332.024 P43S (32 minutes) 59
60 Preparing to Invest (from FINRA Investor Education Foundation) Introduction: Saving and Investing People save and invest to have enough money at some point in the future to pay for the things they want or need. While you might hear these two terms used interchangeably, saving and investing are overlapping, yet distinct concepts that involve different processes. Stated most simply, saving is the act of putting aside for another day some of the money you earn or receive as gifts, while investing is what you do with those dollars, including choosing products and strategies to make money grow or to preserve the assets you’ve accumulated. If you have specific financial goals that will cost money—such as purchasing a car or a home, paying for college or building a secure retirement—accumulating assets and building wealth through saving and investing are the keys to achieving those goals. Saving for the Future There are various ways to save. One way is to open one or more deposit accounts, such as a checking or savings account, in a bank or credit union—or what you’ll sometimes hear described as a savings institution. Deposit accounts give you ready access to your money, and your account balances are typically insured by the federal government up to a set limit. Insurance for bank accounts is provided by the Federal Deposit Insurance Corporation (FDIC), while insurance for credit union accounts is provided by National Credit Union Share Insurance Fund. The insurance currently protects individual, joint, business and trust accounts up to $250,000 for each depositor in a participating bank or credit union. As a result, when you put money into an insured bank or credit union account, you don’t risk losing any of your money—neither the amount you put in, which is your principal, nor the amount you earn in interest. Retirement accounts in those same institutions are insured up to $250,000 for each depositor, provided all the money is in bank accounts. Another way to save is to purchase U.S. savings bonds either through an online account with Treasury Direct (www.treasurydirect.gov), at a bank or sometimes though a program where you work. Savings bonds are backed by the federal government, so your money is safe. While maturity dates differ depending on the type of bond you buy and when you buy it, most saving bonds continue to pay interest for at least 30 years from the date of issue. Series EE savings bonds pay a fixed rate of interest, while Series I savings bonds pay interest linked to the rate of inflation. You can’t cash a savings bond for a year after you purchase it, and you’ll lose three months’ interest if you cash it in within the first five years. After that, you can cash it any time without penalty and collect the interest that has accrued. Earning Interest Every savings institution tells you the interest rate it is paying, expressed as both a nominal, or named, rate and an annual percentage yield (APY). If the APY is larger than the nominal rate, even by a little bit, that means the interest is paid more frequently than once a year, and that the interest earnings are added to the principal (or amount on deposit) each time they are paid. This process, called compounding, creates a bigger base on which future earnings can accumulate. Banks and other financial institutions use a complex formula to calculate how interest compounds over the years. But you don’t have to be a math whiz to see how your money can grow. The Rule of 72 is a shorthand way to figure out how many years it will take for compounding to double your money at a particular interest rate. What you do is divide the interest rate you’re earning into 72. For example, let’s say you have $1,000 and you want to know how long it will take to double your money. If you earn 6 percent interest each year on your account, you divide 72 by 6: 72 ÷ 6 (representing 6 percent interest) = 12 (years to double your money) At the end of 12 years, you will have just over $2,000 in your account. Remember, this illustration only focuses on the impact of compounding on your initial deposit of $1,000—and does not take into account any additional deposits you might make over time. If you were to deposit $100 each year to your account, it would take only six years for you to have $2,000.
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Financial Literacy at the Library T
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Background and Acknowledgments Fina
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Chapter V. Credit Overview of Credi
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6 Newton Free Library hosted Financ
Page 9 and 10: 8 © 2011 American Consumer Credit
Page 11 and 12: Goal Setting & Financial Planning (
Page 13 and 14: Financial Goals Worksheet (SMART)
Page 15 and 16: Planning For Unexpected Life Events
Page 17 and 18: 1. Determine what to keep at home a
Page 19 and 20: 5. Keep a close watch on your bank
Page 21 and 22: 20 Kip Child, FDIC Community Affair
Page 23 and 24: Introduction to Banks (from FDIC Mo
Page 25 and 26: 24 Debit Cards • Fees? • Fee wa
Page 27 and 28: Ways to Take Money Out of Your Acco
Page 29 and 30: Using Electronic Banking (from FDIC
Page 31 and 32: Activity 1: Checking Account Fees (
Page 33 and 34: Activity 3: Record Transactions in
Page 35 and 36: Sample Check Register Check Number
Page 37: Paper Money Copy, cut, and put the
Page 40 and 41: III. Budgeting Practice Good Habits
Page 42 and 43: Create a Budget—and Pay Yourself
Page 44 and 45: Household Budgeting Worksheet Housi
Page 46 and 47: Read the scenario, review the Month
Page 48 and 49: Increase Your Income How might how
Page 50 and 51: Develop a Spending Plan A spending
Page 52 and 53: Implement Your Plan Seek Assistance
Page 54 and 55: • Educate yourself and learn more
Page 56 and 57: Budgeting Quiz 1. How long should y
Page 58 and 59: Budgeting Quiz -Answers 1. Correct
Page 62 and 63: The true magic of compound interest
Page 64 and 65: 9. Pay off high-interest credit car
Page 66 and 67: Risk-Return Relationship Table (FIN
Page 68 and 69: Compounding with Tables (FINRA Inve
Page 70 and 71: Retirement Savings Vehicles (FINRA
Page 72 and 73: In most cases, you roll over a trad
Page 74 and 75: Activity 2: Savings Goals Worksheet
Page 76 and 77: Investing Quiz 1. Which of the foll
Page 78 and 79: Investing Quiz - Answers 1. Correct
Page 80 and 81: Making your First Investments http:
Page 82 and 83: V. Credit Overview of Credit What i
Page 84 and 85: What Is a Credit Report? (from FDIC
Page 86 and 87: How the Credit Report Is Used (from
Page 88 and 89: How to Get Your Free Annual Credit
Page 90 and 91: Credit Cards: What Are They Used Fo
Page 92 and 93: Credit Card Comparison Chart (from
Page 94 and 95: ACCOUNT ACTIVITY Date of Transactio
Page 96 and 97: Activity 1: Maria’s Credit Report
Page 98 and 99: Activity 3: Who Poses the Most Cred
Page 100 and 101: Credit Terms and Definitions Bankru
Page 102 and 103: 8. All of the following appear on y
Page 104 and 105: VI. Borrowing Basics Types of Loans
Page 106 and 107: Car Loans (from FDIC Money Smart) T
Page 108 and 109: To Rent or To Own? (from FDIC Money
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Activity 1: Which Loan Is Best? (fr
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Activity 3: How Much Mortgage Can P
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Note: Make sure you compare loan of
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Estimated prepaid amounts for inter
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Borrowing Basics Quiz 1. Which of t
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Answers for Borrowing Basics Quiz 1
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VII. Life Skills Menu Planning Work
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Grocery Shopping Tips 1. Clean out
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Computer Terms and Definitions Comp
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Housing Terms and Definitions Appli
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8. According to the 2010 Consumer E
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VIII. Glossary Glossary (excerpted
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Compounding: Interest paid on money
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Interest: A percentage of your bala
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Stocks: Parts of a company, called
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IX. Recommend Resources Bibliograph
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Careers and Life Skills Bostick, Na
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Heath, Julia A. Personal finance es
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Debt information for teens: tips fo
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Tutor/Teacher Cordell, Jane. Cambri
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Newton Free Library Financial Educa
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I. Learning English Online Resource
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Investor Knowledge Quiz - http://ww
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American Consumer Credit Counseling
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Nationwide Resources (from American
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This publication is made possible b
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