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YODER | ch.6 Consumers, Savers, and Investors | ECONOMICS

Economics: Chapter 6
by

Ryan Yoder

on 6 November 2012

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Transcript of YODER | ch.6 Consumers, Savers, and Investors | ECONOMICS

consumers, savers,
and investors CHAPTER 6 GDP final value of all goods and services produced
in the country in a year US GDP SOURCES OF
INCOME pg.79 where does your income come from? parents, part - time jobs, odd jobs,
full time jobs, or gifts 1. INCOME FROM WORK 2. INCOME FROM WEALTH WAGE: earnings paid by the hour
or unit of production
SALARY: earings paid weekly, monthly,
or on a yearly basis

Earnings based on
- skills
- education
- performance

Look at Figure 6-2 on page 79 Retail sales worker - $19,000
Cashier - $16,000
Waiter/Waitress - $15,000 WEALTH: value of all things you own tangible possessions, bank accounts, savings, or investments NET WORTH: individual's wealth after debts and other
obligations are subtracted forms of income that can be earned from wealth? rent or interest THE BILLIONAIRES 1 2 3 4 5 Net Worth: $40.0 bil
Fortune: self made
Microsoft WILLIAM GATES III Net Worth: $37.0 bil
Fortune: self made
Investor WARREN BUFFETT Net Worth: $35.0 bil
Fortune: self made
Mexico's telephone lines CARLOS SLIM HELU Net Worth: $22.5 bil
Fortune: self made
Oricle (datebases) LAWRENCE ELLISON Net Worth: $22.0 bil
Fortune: self made
Ikea Stores INGVAR KAMPRAD factors in accmulated wealth initial money you earn and the money
you add to the initial wealth 4 factors in saving 1. income
2. expectations
3. current interest rates
4. taxes 2006 US consumers had
negative rate of savings BUDGET be honest with yourself individual planned income and spending over
a specific time period 3 STEPS IN
PREPARING A BUDGET 1. Setting Financial Goals
2. Estimating Income
3. Planning Expenditures SAVING AND INVESTMENT
ALTERNATIVES SAFETY RATE OF RETURN LIQUIDITY Safety methods during the Depression?
FDIC
- Insured up to $250,000 till 12/31/13
- Drops back to $100,000 on 1/1/14
Insures deposits only
Usually not Credit Unions percentage of interest or the amount of
dividends paid on savings or an investment Ease with which any asset can be converted to cash
Banks and saving institutions usually have lower interest rates RATE OF RETURN MARKET RISK INFLATION RATE OF RETURN EXAMPLE COMPOUND INTEREST RULE OF 72 THE PERCENTAGE OF INTEREST OR THE AMOUNT
OF DIVIDENDS PAID ON SAVINGS OR AN INVESTMENT THE POTENTIAL DECREASE IN THE VALUE
OF A STOCK IN THE STOCK MARKET GENERAL RISE ON OVERALL PRICES AND WITH INFLATION
THE PURCHASE POWER OF YOUR MONEY WILL DECREASE DEPOSIT - $1000
INTEREST - 5%
EARN - $50 over the year DEPOSIT - $1000 ACCOUNT TOTAL - $1050
INTEREST - 5% INTEREST - 5%
TOTAL - $1050 TOTAL - $1102.50 YEAR 1 YEAR 2 EXAMPLE LOOK AT PAGE 86 72 divided by (%) interest = # of years 2004 - $12 trillion
2008 - $14 trillion
2011 - $15 trillion GDP
world ranking 1. EU $17.3 trillion
2. United States $15 trillion
3. China $7.2 trillion
4. Japan $5.8 trillion
5. Germany $3.5 trillion
--------------------------------------------
228. Niue $10 million
229. Tokelau $1.5 million COUNTRY GDP GDP
PER CAPITA 1. QATAR $88,222
2. LUXEMBOURG $81,466
3. SINGAPORE $56,694
----------------------------------------------
7. UNITED STATES $46,860
----------------------------------------------
228. CONGO $300
229. ZIMBABWE $200 COUNTRY GDP (PER CAPTIA) 72/ 8 = 9 Falling Dollar,
Rising Stocks Article WHERE DO I
PUT MY MONEY? 1. SAVINGS DEPOSITS 2. PENSION AND RETIREMENT FUNDS 3. CORPORATE STOCKS 4. MUTUAL FUNDS 5. US SAVINGS BONDS banks, savings/loan firms, or credit unions
passbook savings
> liquid, low interest rates, min. balance
CD (certificate of deposit)
> recipt issued by bank
> specified time for fixed rate
> trade offs? pension fund
> established by employer
> facilitate/organize the investment
> both contribute ira (individual retirement account)
> direct pretax income toward investments
that can grow tax-deferred
roth ira (edward jones example) 401 (k) plan
> usually maintained by the empolyer
> save certain % of income without
paying taxes
> usually empolyers will match % of
employees trf (teachers retirement fund)
> ASA consists of mandatory 3% contribution,
voluntary contributions
> look at trf statement what is the
stock market? system of buying and selling
stocks and shares what determines the price of stocks? supply or demand of that particular stock StOCK
BROKERS SHARES OF STOCK BULL bear ownership in a corporation
proxy = 1 vote
payment of dividends
when do you lose money in the stock market? stock market
& exchanges DOW JONES NASDAQ NYSE S & P 500 represents the US economy in 3 sectors
1. industry
2. transportation
3. utilities
used as indicators for market trends
how markets are going to react around the world known as technology stocks
list over 3,800 companies





all electronic trading new york stock exchange
lists over 2,500 companies
stocks are measured by the
dow jones averages




stock brokers are trading on the floor pool of money used by a company to buy
> stocks, bonds on behalf of consumers
you could own up to 200 different stocks that
make up your fund
diversified invests
Putnam Equity Income A (PEYAX) example index of 500 stocks chosen for market size, liquidity and industry grouping, among other factors
most consider this to be a better representation of the U.S. Market and some see it as a definition of the market United States Treasury issues savings bonds, which are debts of the federal government
how do you get a US savings bond?
2 types of bonds
> I Bonds [face value]
> EE Bonds [1/2 face value] consumer credit enables you to enjoy goods and services before paying for them in full 2 STRINGS TO EVERY CREDIT PURCHASE pay back the principal
pay the interest CREDIT TERMS TO CONSIDER finance charges
annual percentage rate (apr) ADVANTAGES DISADVANTAGES TYPES OF CREDIT AVAILIBLE immediate possession
flexibility
safety
emergency funds
character reference overspending
higher costs
impluse buying home mortgages
auto/consumer loans
credit cards ECONOMICS 2012 Billionaires World http://www.forbes.com/billionaires/list/
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