Save & Invest 101
Tips for Teaching Students About Saving and Investing
The U.S. Securities and Exchange Commission is a great resource that many teens may not know about. G4G found a series of talking points that can help students to learn the basics of saving and investing and help them understand the importance of planning for their financial future. All of this can be found on their website www.sec.gov/investor/students/tips.htm.
A list of resources and interactive tools for young people can also be found on this site. The purpose of Wise-I is to start the dialogue about how to properly save and invest. Money is and always will be apart of our lives. G4G wants its network to be money conscious and have the know-how as to how to responsible when it comes to our finances. Visit Wise-I regularly to see expert advice.
Key Topic: Why Save and Invest?
Many people experience financial hard times when they get older because they never got the facts on saving and investing.
The best way to achieve financial success is to plan for it. Maybe you'd like to: buy a car when you graduate from high school or college;
have money set aside for special occasions or emergencies, buy a house someday, or live comfortably in retirement.
Once you decide what you're saving for—and when you'd like to have it—you can decide how you should save and invest. The best time to learn about money is when you're young and still in school. Starting young lets you take advantage of the magic of "compound interest."
Key Topic: What Is “Compound Interest”?
Compound interest is the interest you earn on interest.
Illustration Using Pizza
Here's a way to look at compound interest. How much does a slice of pizza cost? Would you believe nearly $65,000? If a slice of plain pizza costs $2.00, and you buy a slice every week until you're old enough to retire, you'll spend $5,200 on pizza. If you give up that slice of pizza and invest the money instead, earning 8% interest compounded every year for 50 years, you'll have over $64,678.87.
The Rule of 72 — really just a “rule of thumb” — is a great way to estimate how your investment will grow over time. If you know your investment’s expected rate of return, the Rule of 72 can tell you approximately how long it will take for your investment to double in value. Simply divide the number 72 by your investment’s expected rate of return (ignoring the percent sign). Assuming an expected rate of return of 9 percent, your investment will double in value about every 8 years (72 divided by 9 equals 8). ??Knowing how quickly your investment will double in value can help you determine a “ballpark” estimate of your investment’s future value over a long period of time. Let’s say that you invest $10,000 in a retirement plan. What will your investment be worth after 40 years, if you don’t make any additional contributions? Assuming an expected rate of return of 9 percent, the total approximate value of your investment would double to $20,000 in 8 years, $40,000 in 16 years, and $80,000 in 24 years, $160,000 in 32 years, and $320,000 in 40 years.
This lesson isn’t over yet… click on Wise-I next month for more!
Tips for Teaching Students About Saving and Investing
The U.S. Securities and Exchange Commission is a great resource that many teens may not know about. G4G found a series of talking points that can help students to learn the basics of saving and investing and help them understand the importance of planning for their financial future. All of this can be found on their website www.sec.gov/investor/students/tips.htm.
A list of resources and interactive tools for young people can also be found on this site. The purpose of Wise-I is to start the dialogue about how to properly save and invest. Money is and always will be apart of our lives. G4G wants its network to be money conscious and have the know-how as to how to responsible when it comes to our finances. Visit Wise-I regularly to see expert advice.
Key Topic: Why Save and Invest?
Many people experience financial hard times when they get older because they never got the facts on saving and investing.
The best way to achieve financial success is to plan for it. Maybe you'd like to: buy a car when you graduate from high school or college;
have money set aside for special occasions or emergencies, buy a house someday, or live comfortably in retirement.
Once you decide what you're saving for—and when you'd like to have it—you can decide how you should save and invest. The best time to learn about money is when you're young and still in school. Starting young lets you take advantage of the magic of "compound interest."
Key Topic: What Is “Compound Interest”?
Compound interest is the interest you earn on interest.
Illustration Using Pizza
Here's a way to look at compound interest. How much does a slice of pizza cost? Would you believe nearly $65,000? If a slice of plain pizza costs $2.00, and you buy a slice every week until you're old enough to retire, you'll spend $5,200 on pizza. If you give up that slice of pizza and invest the money instead, earning 8% interest compounded every year for 50 years, you'll have over $64,678.87.
The Rule of 72 — really just a “rule of thumb” — is a great way to estimate how your investment will grow over time. If you know your investment’s expected rate of return, the Rule of 72 can tell you approximately how long it will take for your investment to double in value. Simply divide the number 72 by your investment’s expected rate of return (ignoring the percent sign). Assuming an expected rate of return of 9 percent, your investment will double in value about every 8 years (72 divided by 9 equals 8). ??Knowing how quickly your investment will double in value can help you determine a “ballpark” estimate of your investment’s future value over a long period of time. Let’s say that you invest $10,000 in a retirement plan. What will your investment be worth after 40 years, if you don’t make any additional contributions? Assuming an expected rate of return of 9 percent, the total approximate value of your investment would double to $20,000 in 8 years, $40,000 in 16 years, and $80,000 in 24 years, $160,000 in 32 years, and $320,000 in 40 years.
This lesson isn’t over yet… click on Wise-I next month for more!