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YIS Unit 1 Lesson 1 - Why Invest?

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Young Investors Society

on 6 September 2016

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Transcript of YIS Unit 1 Lesson 1 - Why Invest?

OVERVIEW
This lesson is focused on why people are motivated to invest. You will gain an understanding of short-term satisfaction versus long-term returns and will learn about compounding interest and apply it to real-life scenarios.
OBJECTIVES
At the conclusion of this lesson, you should:
Identify if you are a spender or an investor
UNIT
1
THE SEVEN GOLDEN RULES OF INVESTING
INTRODUCTION

INVESTOR
?
Consider whether you are a spender or an investor.
ARE YOU AN
Pop Quiz
Ready.
Go.
Which one will you take?
I will give you
$100

a new
Mercedes

next year
today
or
A
B
C
The cash
The car
Why are you even looking at other options, you would be crazy not to take the car!
Which one will you take?
I will give you
$100

today
or
A
B
C
The cash today
The same cash tomorrow
Of course you would not wait! What is the point? You would not get anything in return for waiting.
$100

tomorrow
Think about it...
Welcome Young Investors! Congratulations on joining the
Young Investors Society
. It is our goal to help you become master investors.
ESSENTIAL QUESTIONS TO
?
How much cash would you be willing to give up today in return for a promise to receive $500 five years from now? $50? $100? $300? $450? $499?
DISCUSS
The truth is that
The question of building wealth in your life will really boil down to
two questions
Are you able to save each year?
Where could you put the money?
BONDS
So does it really matter where you put your money?
STARTING EARLY
$1,359,199
$2,224,948
Two critical factors of
investors
WE ARE ALL
When you save, where do you put the money?
SCENARIO
Let’s assume you’re 20 years old and just took a job as a firefighter, your childhood dream. Your salary is meager, but you make the goal to save
$1,000 dollars per year
and put it in a retirement account. You work and save for the next 50 years until you retire.
SAVINGS ACCOUNT
The
Average Annual Return
0
%
Amount Accumulated in 50 Years
50,000
$
REAL STATE
or
Average Annual Return
3
%
Amount Accumulated in 50 Years
116,000
$
STOCK MARKET
The
Average Annual Return
0
%
Amount Accumulated in 50 Years
1,359,199
$
STOCK MARKET
Beating the
Average Annual Return
20
%
Amount Accumulated in 50 Years
109,826,119
$
UH, YEAH!
It makes all the difference in the world. In fact, the more money that you can put in the stock market early, the more the magnifying effect of “
compound interest
” or “
compounding
” can work in your favor.
- Albert Einstein
Compound interest is the eighth wonder of the world
If you started saving
$1,000
per year
$190,773
$535,682
at Age
40
at Age
30
at Age
20
at Age
15
(at age 70)
(at age 70)
(at age 70)
(at age 70)
Earn a High Return (i.e. the stock market)
Start Early
COMPOUND INTEREST

The question of whether you will invest is really just a question of how much you believe tomorrow can offer.
if you don't get a return.
if the future is worth for you somewhere between $100 and a new car.
You are an
INVESTOR
You are a
SPENDER
1
|
Lesson
1

WHO ARE INVESTORS? WHY INVEST?
Understand the effects of compound interest
Write
your answer on a piece of paper
LEARNING
ACTIVITY
1
HANDOUT
1.1
Compound Interest
LEARNING
ACTIVITY
2
nt
(
(
Curriculum, videos and lesson plans.
YIS Website
www.younginvestorssociety.org
YIS Glossary of Terms
www.younginvestorssociety.org/resources
For company research including ratios and screens.
ZACKS
www.zacks.com
For company research including ratios and screens.
MORNINGSTAR
www.morningstar.com
For company analysis.
GURU
FOCUS
www.gurufocus.com
For company analysis and stock graphs
.
Y-CHARTS
www.ycharts.com
For basic stock concepts.
WALLSTREETSURVIVOR
www.wallstreetsurvivor.com
For stock charts and basic company information.
YAHOO
FINANCE
finance.yahoo.com
The Little Book That Beat the Market.
JOEL
GREENBLATT
http://goo.gl/Bx6ED9
Write to the above address if you want help arranging a financial professional to come to your class.
GUEST
SPEAKERS
contact@younginvestorssociety.org
Online portal of stock research reports.
SEEKING
ALPHA
www.seekingalpha.com
Great daily content and stock picks.
MOTLEY
FOOL
www.fool.com
The “Wikipedia” of Investing, great online glossary of terms
INVESTOPEDIA
www.investopedia.com
For tracking stock market performance and comparison between stocks.
STOCKCHARTS
www.stockcharts.com
ADDITIONAL
RESOURCES
CLICK
on the blue rectangles to get the website and description of the resource
HIT
after watching a resource to return
here

to continue with the Prezi
with a question:
Let’s start
2
1
So...
What do you think are effects if the firefighter
started
or
didn't start
investing in the stock market at the age of 20?
Age
Amount per year
Interest rate
Total at the age 70
40
30
20
$1000
$1000
$1000
9.8%
9.8%
9.8%
$190,773
$535,682
$1,359,199
or at the age of 15?
15
$1000
9.8%
$2,224,948
Almost
x2
LET'S

PLAY
https://play.kahoot.it/#/?quizId=23643390-9785-409e-940c-0404f6cc20e0
LET'S
BEGIN
Full transcript