How do you know if you should invest in a stock? There are some standard ways that you can use to evaluate a stock. Start with the ticker symbol or the letters that identify a stock on a stock exchange. You can usually find out the following:
last traded value - most recent per share prince that it was purchased at
net change - how much it has gone up or down
bid price - most recent amount offered for it
ask price - most recent amount someone has offered to see the stock for
day high and low - highest and lowest price for the day
volume traded - number of shares trade in the last day
52 week high and low - highest and lowest price for the year
price
Plus the really important stuff:
P/E- Price to earnings ratio. The lower the number is usually the better.
EPS - amount of earnings the company generates per each share of stock that exists. The more generated the better.
Dividend & % - shows the current dividend and the percent of earnings that the dividend represents. Not all companies issue dividends.
Capitalization - the total number of outstanding shares times the price per share. There are large and small cap companies. Generally the smaller the market cap of a stock the riskier it is.
When you examine this information along with company listings of financial information you see if the company is financially sound and if its revenues and earnings have been increasing on a regular basis.
You'll need to look at how much debt or loans the company has. In general, less debt is better than a lot of debt. Also look at how well the company is doing in comparison to its competitors and the industry too.
There are print and online resources that provide financial information on individual stocks and industries.
Thursday, November 17, 2011
Tuesday, November 15, 2011
Investing - Sectors
Experts divide stock into categories based on industries. These industrial categories are called sectors. Most financial advisors recommend that a diversified portfolio should include from five to teen stock in different industries. Familiar examples of industrial categories are retail, health care, technology and energy.
Sectors are important because many factors effect the economy in different ways. Some industries do well while others do poorly. For example, when the economy is doing well and wages are up, retail stores do well. When the economy is doing poorly, companies that provide necessities like health care or food do well, but retail stores do poorly. People have less money to spend on non-essentials. In this way, diversification helps protect your against large overall losses.
Sectors are important because many factors effect the economy in different ways. Some industries do well while others do poorly. For example, when the economy is doing well and wages are up, retail stores do well. When the economy is doing poorly, companies that provide necessities like health care or food do well, but retail stores do poorly. People have less money to spend on non-essentials. In this way, diversification helps protect your against large overall losses.
Monday, November 14, 2011
Investing - Diversitfication
The key to protecting your money when you invest is diversification. It means to have a variety of investments. Why should you diversify?
If you have all your money in stocks and the stock market goes down, your collection of investments will most likely decline at a rate that's similar to the market. Your collection of investments is called your portfolio.
But if two thirds of your money is invested in stocks and one third is in bonds, then you profolio will most likely decline less than the stock market. Putting some of your money ni stocks and some in bonds is an example of diversification.
You can diversity even more by putting together a combination of different categories of investments such as stocks, bonds, CDs and cash. You need to select a variety of investments within each category. You'll want to make as much money as possible while protecting the money that you invest.
If you have all your money in stocks and the stock market goes down, your collection of investments will most likely decline at a rate that's similar to the market. Your collection of investments is called your portfolio.
But if two thirds of your money is invested in stocks and one third is in bonds, then you profolio will most likely decline less than the stock market. Putting some of your money ni stocks and some in bonds is an example of diversification.
You can diversity even more by putting together a combination of different categories of investments such as stocks, bonds, CDs and cash. You need to select a variety of investments within each category. You'll want to make as much money as possible while protecting the money that you invest.
Tuesday, November 8, 2011
How Stocks Earn Money
Stocks earn money in two ways: increasing in value and dividends. When a company's revenues (money earned) and profit are increasing, the value of a share of its stock increases. As a result, buyers are willing to pay more for it. Capital gain is the difference between what you originially paid for a share of stock and its present value. If its value decrease, that's a capital loss.
Stocks also may pay dividends. The key to growing investments is reinvesting your captial gains and dividends. When you reinvest the money you make from investments, you buy more share with it instead of spending it. Over time, you own more and more shares and have more and more gains and dividends.
Stocks also may pay dividends. The key to growing investments is reinvesting your captial gains and dividends. When you reinvest the money you make from investments, you buy more share with it instead of spending it. Over time, you own more and more shares and have more and more gains and dividends.
Monday, November 7, 2011
Investing - Exchanges, Brokers & Stocks
A share of stock represents a tiny share of a company. Stocks are sold in different stock markets or exchanges. The two major exchanges are the New York Stock Exchange (NYSE) and NASDAQ or the National Association of Securities Dealers Automated Qutation system.
To buy stock, you place an order with a broker. A broker is someone who completes transactions between buyers and sellers. There are different types of brokers:
full service- provide investment advice and recommendations
discount- place orders at a low price but limited advice
electronic- place orders over the Internet
In addition, some mutual fund companies offer brokerage services.
There are two types of stocks: common and preferred. There are two difference between the two types of stocks. A company will decide whether or not to pay a dividend or a percentage of it's earnings to stockholders. Preferred stock pays a guaranteed dividend. If a company goes out of business, their assets are used to pay off bond and stockholders. Preferred stockholders are paid before common stockholders. If there is no money left then common stock holders will not be paid.
To buy stock, you place an order with a broker. A broker is someone who completes transactions between buyers and sellers. There are different types of brokers:
full service- provide investment advice and recommendations
discount- place orders at a low price but limited advice
electronic- place orders over the Internet
In addition, some mutual fund companies offer brokerage services.
There are two types of stocks: common and preferred. There are two difference between the two types of stocks. A company will decide whether or not to pay a dividend or a percentage of it's earnings to stockholders. Preferred stock pays a guaranteed dividend. If a company goes out of business, their assets are used to pay off bond and stockholders. Preferred stockholders are paid before common stockholders. If there is no money left then common stock holders will not be paid.
Sunday, November 6, 2011
Bonds
A bond is a loan to a company or government. When a company or government needs to raise money, it will often issue a bond. When you buy a bond, you are paid interest at regular intervals such as monthly, quarterly or annually. There are several different types of bonds:
Treasury bonds - issued by the federal government. they are available in two, five and ten year periods. The periods are when the bonds mature or the money is payed back to you.
Municipal bonds - issue by state or local governments. Interest earned is not taxed as long as you live in the state where the bond is issued.
Corporate bonds - issued by a company. Interest rates vary. Riskier companies often pay higher rates in order to get people to buy their bonds.
Treasury bonds - issued by the federal government. they are available in two, five and ten year periods. The periods are when the bonds mature or the money is payed back to you.
Municipal bonds - issue by state or local governments. Interest earned is not taxed as long as you live in the state where the bond is issued.
Corporate bonds - issued by a company. Interest rates vary. Riskier companies often pay higher rates in order to get people to buy their bonds.
Saturday, November 5, 2011
Investing - Rish and Reward
You invest because you think that you can make money. However, you can lose money too. That's risk. For example, you could buy a share of stock for $10 and it could increase in value to $50 or decrease in value to $0.
Some stocks are riskier than others. Often the riskier an investment is, the greater it potential gain. A larger potential gain can also mean a larger potential loss. How much risk is appropriate? It depends on three factors:
Your age. The younger you are, the longer yo have to gain back money you lose because you'll be working and investing for many years.
Your financial situation. If you support a family or your saving for a specific short term goal then you will want to take less risk.
Your personality. Some people are adventurous while others are nervous when they feel their money is at risk.
Some stocks are riskier than others. Often the riskier an investment is, the greater it potential gain. A larger potential gain can also mean a larger potential loss. How much risk is appropriate? It depends on three factors:
Your age. The younger you are, the longer yo have to gain back money you lose because you'll be working and investing for many years.
Your financial situation. If you support a family or your saving for a specific short term goal then you will want to take less risk.
Your personality. Some people are adventurous while others are nervous when they feel their money is at risk.
Friday, November 4, 2011
Why Invest?
Why invest? There are two major reasons for investing: retirement and increasing your wealth.
Nobody wants to work forever! One of the most important things you can do financially is invest for retirement. If you start now while you are young, the longer your money has to make a profit and the more you get from compounding.
There are two main types of accounts used for retirment investing: 401 (k) plans and individual retirement accounts (IRAs)
The 401 (k) plan takes its name from the section of the tax code that describes it. A company sets up this type of plan for its employees. Then the employees can contribute up to a certain percentage of their salary. In most cases, the company will match, dollar for dollar, the amount of oney that the employee contribues.
An IRA is established by an individual. You can have both an IRA and a 401 (k) plan. The amount of money that you can contribute is adjusted annually. There are two different types: traditional and Roth IRAs. In the tradition IRA, the money that you contribute is subtracted from your earnings before you pay taxes. Payment of taxes is deferred or put off until you withdraw the money later in life. This is great for people who expect to earln less money when they retire than while working. They will be taxed at a lower rate. Roth IRAs are contributions that are already taxed. You will not pay taxes on it when you withdraw it.
You should also invest to increase your wealth and gain financial security. Having money gives you the ability to realize many different goals. Put a little away on a regualar basis. You can build up savings to one day do what you want.
Nobody wants to work forever! One of the most important things you can do financially is invest for retirement. If you start now while you are young, the longer your money has to make a profit and the more you get from compounding.
There are two main types of accounts used for retirment investing: 401 (k) plans and individual retirement accounts (IRAs)
The 401 (k) plan takes its name from the section of the tax code that describes it. A company sets up this type of plan for its employees. Then the employees can contribute up to a certain percentage of their salary. In most cases, the company will match, dollar for dollar, the amount of oney that the employee contribues.
An IRA is established by an individual. You can have both an IRA and a 401 (k) plan. The amount of money that you can contribute is adjusted annually. There are two different types: traditional and Roth IRAs. In the tradition IRA, the money that you contribute is subtracted from your earnings before you pay taxes. Payment of taxes is deferred or put off until you withdraw the money later in life. This is great for people who expect to earln less money when they retire than while working. They will be taxed at a lower rate. Roth IRAs are contributions that are already taxed. You will not pay taxes on it when you withdraw it.
You should also invest to increase your wealth and gain financial security. Having money gives you the ability to realize many different goals. Put a little away on a regualar basis. You can build up savings to one day do what you want.
Thursday, November 3, 2011
Mutual Funds & Indexes
Mutual funds are a type of investment in which many people pool their money to buy an assortment of stocks. By investing in a mutual fund, you get to invest in a variety of companies without having to buy share of each one individually.
It also allows you to buy share in companies that you cannot afford to buy alone. Mutual funds are offered by many investment firms. They are managed by a professional fund manager. They pick stocks for the fund. They make the buy and sell decisions.
You buy shares in a mutual fund in the same way that you would purchase shares of stock. They are many different types of mutual funds that specialize in different industries or countries. There are two basic types: load and no load. "Load" referes to a percentage of the invested amount that the mutual fund company keeps as a fee when you buy shares.
When there is no charge for investing, it's called a no load fun. Mutual fund companies provide a prospectus for each fund that they offer. It's basically a booklet about the fund, explains its investment strategies, etc... Read the prospectus carefully before investing.
An index is a standard meausre of the performance of the stock market as a whole. It's based on the stocks of companies traded on major stock markets. You can find out how well your mutual fund is performing by comparing it to an index.
It also allows you to buy share in companies that you cannot afford to buy alone. Mutual funds are offered by many investment firms. They are managed by a professional fund manager. They pick stocks for the fund. They make the buy and sell decisions.
You buy shares in a mutual fund in the same way that you would purchase shares of stock. They are many different types of mutual funds that specialize in different industries or countries. There are two basic types: load and no load. "Load" referes to a percentage of the invested amount that the mutual fund company keeps as a fee when you buy shares.
When there is no charge for investing, it's called a no load fun. Mutual fund companies provide a prospectus for each fund that they offer. It's basically a booklet about the fund, explains its investment strategies, etc... Read the prospectus carefully before investing.
An index is a standard meausre of the performance of the stock market as a whole. It's based on the stocks of companies traded on major stock markets. You can find out how well your mutual fund is performing by comparing it to an index.
Money Market Accounts
A money market account is another type of savings account offered by some banks. These accounts require that you deposit a specific amount of money. They have a higher rate of interest. They are considered very safe investments because like a savings account they are insured by the government. The FDIC insures money market accounts up to $100,000.
Money market accounts allow you to withdraw your money at any time. Often, the account comes with a checkbook. You can write a check on the money market account. It's not meant to be a checking account or one that you would withdraw from regularly.
Money market accounts do not have a fixed interest rate. It can change from day to day.
Money market accounts allow you to withdraw your money at any time. Often, the account comes with a checkbook. You can write a check on the money market account. It's not meant to be a checking account or one that you would withdraw from regularly.
Money market accounts do not have a fixed interest rate. It can change from day to day.
Wednesday, November 2, 2011
Certificates of Deposit
Certificates of Deposit or a CD is an agreement between you and the bank or a credit union. You agree to keep your money in an account for a specific amount of time. They agree to pay you a higher rate of interest than you could get by depositing your money into a savings account. The agreement states:
How much money you deposited
The interest rate of the CD
The amount of time you must keep your money in the account
Financial instutions offer different kinds of CDs. The interest rate, the amount of money you deposit and the lenght of time of the deposit vary. All CDs are insured by the FDIC. This ensures that your money is safe.
CDs are less liquid than a saving account. They are based on a set time period. You are required to keep your money in the account for that time period. If you take you money out before the time has passed, then you'll have to pay a fee.
How much money you deposited
The interest rate of the CD
The amount of time you must keep your money in the account
Financial instutions offer different kinds of CDs. The interest rate, the amount of money you deposit and the lenght of time of the deposit vary. All CDs are insured by the FDIC. This ensures that your money is safe.
CDs are less liquid than a saving account. They are based on a set time period. You are required to keep your money in the account for that time period. If you take you money out before the time has passed, then you'll have to pay a fee.
Tuesday, November 1, 2011
UR $ 4 Life, November 8, Princess Anne Library
Everybody needs a little help understanding money. It's hard to figure it all out. Your library offers programs and resources just for teens to help you get more bang for your buck. Snacks and prizes too!
Sign up for UR $ 4 Life on November 8, 6 to 7 p.m. at the Princess Anne Area Library to have some fun and learn something new. It's your money for your life – we’ll help you be smart about it. Call (757) 385-2610 to register.
Sign up for UR $ 4 Life on November 8, 6 to 7 p.m. at the Princess Anne Area Library to have some fun and learn something new. It's your money for your life – we’ll help you be smart about it. Call (757) 385-2610 to register.
Saturday, October 29, 2011
Investing - Diversification
Investing in many things reduces the amount of risk that you are taking when making investments. You may choose to open a savings accoung, invest some money in the stock market and purchase some government bonds.
By doing so, you spread out your investment risk. By investing in many different investments, rather than one, you are ensuring that even if a one investment goes wrong, leaving you with loss or low returns, you will still make money on your overall investments.
Making several different investments as a way of reducing overall risk is called diversification. Investors diversify their investments so that no single loss can harm their financial situation in a serious way.
By doing so, you spread out your investment risk. By investing in many different investments, rather than one, you are ensuring that even if a one investment goes wrong, leaving you with loss or low returns, you will still make money on your overall investments.
Making several different investments as a way of reducing overall risk is called diversification. Investors diversify their investments so that no single loss can harm their financial situation in a serious way.
Friday, October 28, 2011
Investing - Risk and Reward
Each method of investing and every unique investment comes with its own risk and potential benefits. When you select an investment, make sure that you understand what the risks are as well as what type of investment will work best for your financial situation. Here are several different ways to invest your money:
Savings Account
Certificate of Deposit
Money Market Account
U.S. Bond
Mutual Fund
Stock
Collectibles
Where should you invest your money? You also need to consider the following when investing:
Safety - How risky is the investment? Safety is a measure of risk. A safe investment is one with little risk of losing money. An investment that is not considered safe may have a high likelihood of lsoing some or all of the money that you invest.
Liquidity- How easily can you get your money out of the investment? Can you afford to leave your money in an investment for a long period of time?
Return on investment - How much might your investment earn? Investments with a low rate of return might not make much money. But they also may not cost much to begin with.
Losing at the investment options listed above, collectibles is a risky investment but it could potentially bring a great rate of return. A savings account has very low risk, but it may not bring your a large return.
In order to make higher returns, you may need to invest more, but that may also mean that you risk more. Investments with lower potential returns may earn less, but you're less likely to lose your money. You need to think of each investment as a trade off between risk and reward.
Savings Account
Certificate of Deposit
Money Market Account
U.S. Bond
Mutual Fund
Stock
Collectibles
Where should you invest your money? You also need to consider the following when investing:
Safety - How risky is the investment? Safety is a measure of risk. A safe investment is one with little risk of losing money. An investment that is not considered safe may have a high likelihood of lsoing some or all of the money that you invest.
Liquidity- How easily can you get your money out of the investment? Can you afford to leave your money in an investment for a long period of time?
Return on investment - How much might your investment earn? Investments with a low rate of return might not make much money. But they also may not cost much to begin with.
Losing at the investment options listed above, collectibles is a risky investment but it could potentially bring a great rate of return. A savings account has very low risk, but it may not bring your a large return.
In order to make higher returns, you may need to invest more, but that may also mean that you risk more. Investments with lower potential returns may earn less, but you're less likely to lose your money. You need to think of each investment as a trade off between risk and reward.
What's an Investment
Investments allow you to make money with your money, allowing you to save more money over the long term and build wealth. Depositing money in a bank or credit union, buying stock in a company or buying a bond --- all of these are investments.
Choosing the right kind of investment for you and your money can be challenging. There are so many different types of investments. Each type carries with it unique risks. Some are so risky that they possibly cause you to lose all of the money that you invested, while others may make you very large profits (rewards).
Risk and reward are not the only things to think about when investing. You need to consider how easily it is to take your money out of an investment if you find that you need it or just want to withdraw the investment.
It's important to make investments with the long term in mind, find investments that suit your personal financial situation and understand that different investments have different kinds of return. You need to take all of these considerations into account when selecting investments.
Choosing the right kind of investment for you and your money can be challenging. There are so many different types of investments. Each type carries with it unique risks. Some are so risky that they possibly cause you to lose all of the money that you invested, while others may make you very large profits (rewards).
Risk and reward are not the only things to think about when investing. You need to consider how easily it is to take your money out of an investment if you find that you need it or just want to withdraw the investment.
It's important to make investments with the long term in mind, find investments that suit your personal financial situation and understand that different investments have different kinds of return. You need to take all of these considerations into account when selecting investments.
Thursday, October 27, 2011
Credit Report
Most people finance their homes with mortages and pay for their cars with loans. Students often need loans to pay for college. And a lot more people make purchases with credit cards.
Credit is not given. You have to apply for it. Finance companies will not give you credit unless their know a lot about you. They reply on a credit report.
A credit report is a record of your credit activities. It lists any credit-card accounts or loans you may have, the balances, and how regularly you make your payments. It also shows if any action has been taken against you because of unpaid bills.
A company that gathers and sells credit information is called a consumer reporting agency (CRA). These types of companies collect information about your credit activities, store it in giant databases, and charge a fee for supplying the information. The most common type of CRA is the credit bureau.
There are three major credit bureaus that operate nationwide: Equifax, Experian, Trans Union. Plus many smaller companies serving local markets.
Your credit rating is drawn from your credit report, which outlines your borrowing, charging, and repayment activities. A good rating helps you reach financial goals; a poor rating limits your financial opportunities.
Since your credit report influences whether you are able to buy a home and get a job, it is extremely important to protect your credit rating by making loan and bill payments on time and by not taking on more debt than you can handle.
Check your credit for free at Annual Credit Report.
Credit is not given. You have to apply for it. Finance companies will not give you credit unless their know a lot about you. They reply on a credit report.
A credit report is a record of your credit activities. It lists any credit-card accounts or loans you may have, the balances, and how regularly you make your payments. It also shows if any action has been taken against you because of unpaid bills.
A company that gathers and sells credit information is called a consumer reporting agency (CRA). These types of companies collect information about your credit activities, store it in giant databases, and charge a fee for supplying the information. The most common type of CRA is the credit bureau.
There are three major credit bureaus that operate nationwide: Equifax, Experian, Trans Union. Plus many smaller companies serving local markets.
Your credit rating is drawn from your credit report, which outlines your borrowing, charging, and repayment activities. A good rating helps you reach financial goals; a poor rating limits your financial opportunities.
Since your credit report influences whether you are able to buy a home and get a job, it is extremely important to protect your credit rating by making loan and bill payments on time and by not taking on more debt than you can handle.
Check your credit for free at Annual Credit Report.
Wednesday, October 26, 2011
Credit Cards
The word "credit" come from the Latin word "creditus" which means trust. Why should anyone trust a thin piece of plastic?
That's what credit cards are...just a thin piece of plastic with a magnetic strips. The trust lies in the information contained into the strip; it identifies who the card belongs to and the status of their credit.
When someone uses a credit card to make a purchase, the seller runs the card through a machine that reads the magnetic strip. If the person's credit account is "good", then the transaction goes through.
You must apply for a credit card through a bank, credit union or other company. You must be at least 18 years old and not have "bad" credit. It's a lot easier to have "bad" credit than you think. It can occur by making late payments on your credit card or other bills or just having too much debt.
A credit card allows you to buy things now and pay for them later. It's kind of like taking out a short term loan. They are very handy in emergencies, when you need money fast or when you just don't have cash on hand.
A credit card has a spending limit. You cannot spend more on the credit card than the limit. For example, if your limit is $5,000, then you cannot spend more than $5,000 on that credit card within the cycle --- usually 20 to 30 days.
Financial instutions and companies make more on credit cards by charging finance fees. They might charge an annual fee for the card, late fees and some charge is the card is not payed off each month.
Credit cards work best for people who stay within their budgets and pay off their credit card account each monthy so that they avoid finance charges.
That's what credit cards are...just a thin piece of plastic with a magnetic strips. The trust lies in the information contained into the strip; it identifies who the card belongs to and the status of their credit.
When someone uses a credit card to make a purchase, the seller runs the card through a machine that reads the magnetic strip. If the person's credit account is "good", then the transaction goes through.
You must apply for a credit card through a bank, credit union or other company. You must be at least 18 years old and not have "bad" credit. It's a lot easier to have "bad" credit than you think. It can occur by making late payments on your credit card or other bills or just having too much debt.
A credit card allows you to buy things now and pay for them later. It's kind of like taking out a short term loan. They are very handy in emergencies, when you need money fast or when you just don't have cash on hand.
A credit card has a spending limit. You cannot spend more on the credit card than the limit. For example, if your limit is $5,000, then you cannot spend more than $5,000 on that credit card within the cycle --- usually 20 to 30 days.
Financial instutions and companies make more on credit cards by charging finance fees. They might charge an annual fee for the card, late fees and some charge is the card is not payed off each month.
Credit cards work best for people who stay within their budgets and pay off their credit card account each monthy so that they avoid finance charges.
Monday, October 24, 2011
Savings Accounts
A savings account helps keep your money safe. The most common types of savings accounts are called passbook or statement accounts.
Interest is the key to how your savings grows. It's the fee that the financial instution pays you for keeping your money in a savings account. That's right! You earn this money.
There are other types of savings accounts:
Interest is the key to how your savings grows. It's the fee that the financial instution pays you for keeping your money in a savings account. That's right! You earn this money.
There are other types of savings accounts:
- Money Market Accounts - pays you interest and allows you to write a certain number of checks each month. You must keep a minimum balance.
- Certificates of Deposit - pays more interest than a Money Market Account. But you must keep your money in the CD for a set time period.
- Individual Retirement Account - Pays you interest that is not taxed until you retire.
- Education IRA - It allows you or your parents to put away money for your colleged education. Interest is not taxed if the money is used to pay for college.
Keep reading to learn more!
Wednesday, October 19, 2011
What's a Check?
A check allows you to spend money without carrying around cash. It's basically an order telling your bank or credit union to pay someone a certain amount of money using the funds that are in your checking account.
Checks are the second more popular way to buy things. Number one is cash. Checks give you a record that you can keep. You get a monthly statement from the bank or credit union that lets you see how much, when and with whom you spent your money.
Some checking accounts offer interest, just like savings accounts. All checks have a routing number at the bottome which identifies the bank from which it came. They all also have a "pay to the order of " .
There are millions of checking accounts in the United States today. Do you have one?
Checks are the second more popular way to buy things. Number one is cash. Checks give you a record that you can keep. You get a monthly statement from the bank or credit union that lets you see how much, when and with whom you spent your money.
Some checking accounts offer interest, just like savings accounts. All checks have a routing number at the bottome which identifies the bank from which it came. They all also have a "pay to the order of " .
There are millions of checking accounts in the United States today. Do you have one?
Saturday, October 15, 2011
Banking in Ameria
A bank is a place to keep money. It's also a business. How does it work? Your money can be deposited or put into an account. The bank lends some of the money on deposit to people who need it. The bank makes money by charging a lending fee.
When banking first began in America, almost anyone could open a bank and print "bank notes". In fact, before the Federal Reserve System (the Fed)was founded, there were 30,000 different currencies in the United States.
The Federal Reserve System was established in 1913 to help banks become more efficient. The Fed supervises banking. it also controls the flow or supply of money so that there is always enough on hand to meet the public's demand.
The Fed distributes all the coin and paper money produced in the United States through 12 offices. Old money is returned to the Fed. Coins can be melted down to make new money. Paper money is shredded or burned.
When banking first began in America, almost anyone could open a bank and print "bank notes". In fact, before the Federal Reserve System (the Fed)was founded, there were 30,000 different currencies in the United States.
The Federal Reserve System was established in 1913 to help banks become more efficient. The Fed supervises banking. it also controls the flow or supply of money so that there is always enough on hand to meet the public's demand.
The Fed distributes all the coin and paper money produced in the United States through 12 offices. Old money is returned to the Fed. Coins can be melted down to make new money. Paper money is shredded or burned.
Monday, October 10, 2011
Try this --- Interest
Susie deposited $10 into her savings account every month for a year.
1. How much money has Susie deposited for the year?
2. Susie's account gives her 5% interest a year. Add that to her account. Hint: This is calculated as: ______________ 0.05 x (answer to question 1)
3. How much is in Susie's account, including the deposits and interest?
1. How much money has Susie deposited for the year?
2. Susie's account gives her 5% interest a year. Add that to her account. Hint: This is calculated as: ______________ 0.05 x (answer to question 1)
3. How much is in Susie's account, including the deposits and interest?
Sunday, October 9, 2011
Your Privacy --- Identity Theft
Identity theft! It's one of the fastest growing crimes in the United States. It affects 9 million Americans each year. As a teen, you are at greater risk. A thief can open an account in your name and you won't even know it until you try to apply for a credit card or get a loan from the bank. They can use your social security number and apply for a driver's license even before you do. Don't let it happen to you!
Here's what you can do to prevent identity theft:
Here's what you can do to prevent identity theft:
- Don't recycle or throw away unshredding paper with personal information like a cash register receipt, cell phone bill or pre-approved credit card offer.
- Use privacy features on your online social networks
- Log off public computers especially when you've read your email, did online banking or checked out your Facebook.
- Ask why and how it will be used before you give out your social security number when applying for a job, the bank, doctor's office or sports team
- Don't share your passwords or account information
- Don't use file sharing programs for free music or movies
Learn more about how thieves work and ways to protect your privacy by reading Money Talks Teen Guide Privacy, Please!
Saturday, October 8, 2011
Investing - Risk Tolerance and Capacity
Before you invest, it's important to consider both your risk tolerance and your risk capacity. Risk tolerance is your willingness to take on risk. Risk capacity is how much risk you can afford to take on given your financial situation. Both are equally important.
Most people are risk-averse. That means, with everything else the same, they would prefer less to more risk. It also means that they would prefer the highest expected return available for a given level or risk. It makes sense then that any investor would take on additional risk because they expect to earn a higher rate of return on that investment.
Think of it like this...there is a range of investment options available to you. The low risk option has a low rate of return but almost no risk, like a savings account or a certificate of deposit. For your parents, it might be sercurities issued and guaranteed by the U.S. government like a Treasury bill, note or bond. If you select this option you can expect to earn a low rate of return but the investment is not risky. Or in other words, your actual rate of return will be very close to the return that you expect.
The high risk option has a high rate of expected return but carries potentially a lot of risk. To select this option, you would need to be both willing and able to take on the risk associated with the investment. Potentially, you would need to be both willing and able to lose your investment.
Read more about risk and return at FINRA's Investing Strategies web site.
Most people are risk-averse. That means, with everything else the same, they would prefer less to more risk. It also means that they would prefer the highest expected return available for a given level or risk. It makes sense then that any investor would take on additional risk because they expect to earn a higher rate of return on that investment.
Think of it like this...there is a range of investment options available to you. The low risk option has a low rate of return but almost no risk, like a savings account or a certificate of deposit. For your parents, it might be sercurities issued and guaranteed by the U.S. government like a Treasury bill, note or bond. If you select this option you can expect to earn a low rate of return but the investment is not risky. Or in other words, your actual rate of return will be very close to the return that you expect.
The high risk option has a high rate of expected return but carries potentially a lot of risk. To select this option, you would need to be both willing and able to take on the risk associated with the investment. Potentially, you would need to be both willing and able to lose your investment.
Read more about risk and return at FINRA's Investing Strategies web site.
Friday, October 7, 2011
Investing - Stocks Ups and Downs
There's a lot to learn when you invest in shares of stock. First, you need to expect the prices of those stock shares to go up and down. They will --- often every day! Here are some of the many reasons why a stock price will increase or decrease:
- increase or decrease in sales or profits
- change in corporation's management
- change in products or services
- a famous investor buys or sells shares of stock
- a well-known analyst upgrades or downgrades their evaluation of the company
- research reveals something good or bad about the corporation's products
- the corporation wins or losses a lawsuit
- a lot of people are either buying or selling their shares
- the stock market is either up or down
- positive or negative media coverage toward the corporation
- rumors
Thursday, October 6, 2011
Investing - Risk
Everyday, we all take risks without even thinking about it. When you invest your hard, earned money, you need to think about what you expect for your return and how much you are willing to risk to get that return.
You can stash your cash in your top dresser drawer. There's no risk involved. But, it won't grow other than when you add to it. That means it has a zero growth rate. The up side it that it's always at hand. You don't have to drive to the bank to get it or you don't have to wait until it matures to withdraw it.
You want more than a 0% growth rate? Then, decide how much you expect to make from your investments and look at the risks involved. You'll need to strike a balance between your expectations and the risks involved to achieve them. Your bank or credit account, certificate of deposits, money market funds are insured. Ask to make sure! They have a little more risk but a larger growth rate.
Over the long term, stocks often offer a better rate of return. There are more ups and downs.
You can stash your cash in your top dresser drawer. There's no risk involved. But, it won't grow other than when you add to it. That means it has a zero growth rate. The up side it that it's always at hand. You don't have to drive to the bank to get it or you don't have to wait until it matures to withdraw it.
You want more than a 0% growth rate? Then, decide how much you expect to make from your investments and look at the risks involved. You'll need to strike a balance between your expectations and the risks involved to achieve them. Your bank or credit account, certificate of deposits, money market funds are insured. Ask to make sure! They have a little more risk but a larger growth rate.
Over the long term, stocks often offer a better rate of return. There are more ups and downs.
Wednesday, October 5, 2011
Investing - Growth Rate
The growth rate or how fast your money grows from year to year is really important. In our compounding example, we used a growth rate of 10%. That's how fast your money grew over the time that you had it invested.
Your money will earn more or less depending on where and how you've invested it. A typical bank account will earn about 5% each year. Shop around to find the best rate. Read the Smart Banking post to get some ideas on how. There are other ways for you to invest your money and get a different growth rate.
A certificate of deposit (CD) is an investment option available at a bank or a credit union. It's kind of like a saving account but different. Here's how it works. You deposit a sum with bank, wait a specified period of time, and then withdraw the sum plus interest. It' s kind of like you are loaning the bank your money to use for a specified time period and they are paying you for the right to use your money. The time period is anywhere from three months to six years.
Another way for you to invest your money is by purchasing stock. What is stock? Basically it means that you own a piece of the company or in other words you have a claim on the company's assets and profits. Ownership is determined by the number of shares that a person owns divided by the total number of shares outstanding.
So, if you own 50 of the 1000 share of stock that a company has outstanding then you own 5% of the company. Only a specific type of company, a corporation, can issue stock. While stock often provide a higher growth rate, there is more risk involved with investing your money in them.
In the next post, we'll talk about risk.
Your money will earn more or less depending on where and how you've invested it. A typical bank account will earn about 5% each year. Shop around to find the best rate. Read the Smart Banking post to get some ideas on how. There are other ways for you to invest your money and get a different growth rate.
A certificate of deposit (CD) is an investment option available at a bank or a credit union. It's kind of like a saving account but different. Here's how it works. You deposit a sum with bank, wait a specified period of time, and then withdraw the sum plus interest. It' s kind of like you are loaning the bank your money to use for a specified time period and they are paying you for the right to use your money. The time period is anywhere from three months to six years.
Another way for you to invest your money is by purchasing stock. What is stock? Basically it means that you own a piece of the company or in other words you have a claim on the company's assets and profits. Ownership is determined by the number of shares that a person owns divided by the total number of shares outstanding.
So, if you own 50 of the 1000 share of stock that a company has outstanding then you own 5% of the company. Only a specific type of company, a corporation, can issue stock. While stock often provide a higher growth rate, there is more risk involved with investing your money in them.
In the next post, we'll talk about risk.
Tuesday, October 4, 2011
Investing - Compounding
You have some money that you've earned and stashed in your saving account. Now it's time to watch it grow. Yes, it can grow a lot.
If you leave your money to grow for a long time, $100 can turn into a million dollars. The longer you leave your money, the more it grows. It's called compounding!
It depends on three things:
- how much you invest
- how long you invest it
- the rate of growth
When something grows over time, the amount by which it grows also grows.
For example, if you start with $100 and a 10% growth rate, you will earn $10 the first year that you invest it. If you leave that $110 alone and don't spend it, then the next year you will have $121. 10% of $110 is $11. You have the originial $100 plus the $10 you earned the first year and an $11 dollars that you earned the second year.
Your inital investment of $100 is growing and the amount by which it's growing is also growing. That's compounding.
Monday, October 3, 2011
Smart Banking
You've worked hard for your money. Now, it's time to save smart by banking smart. A savings account can...
keep your money safe
help you earn more money
cash your check
provide access to your money
A bank or a credit union is a safe place to stash your cash. Your account is insured by the federal government. Your account will be interest-bearing. That means that your money earns interest when it's on deposit in your account.
At a credit union, you need a minimum balance. But, you do not pay for an account. At most banks, you pay for the convenience of a bank account. The financial services they offer are just like a bank.
A bank might offer free checking if you are a shareholder or if you use direct deposit for your paycheck. So, shop around and find an financial institution that fits your needs and your budget.
Don't be fooled by the easy of using ATM machines! Whether you select a bank or a credit union, don't let ATM machine fees take a bite out of your hard, earned savings. The convenience of using automated teller machines is an increasingly pricey one. Use them sparingly. Most banks and credit union charge you to use other institution's machine but not there own. Check into the fees before you use the ATM machine.
keep your money safe
help you earn more money
cash your check
provide access to your money
A bank or a credit union is a safe place to stash your cash. Your account is insured by the federal government. Your account will be interest-bearing. That means that your money earns interest when it's on deposit in your account.
At a credit union, you need a minimum balance. But, you do not pay for an account. At most banks, you pay for the convenience of a bank account. The financial services they offer are just like a bank.
A bank might offer free checking if you are a shareholder or if you use direct deposit for your paycheck. So, shop around and find an financial institution that fits your needs and your budget.
Don't be fooled by the easy of using ATM machines! Whether you select a bank or a credit union, don't let ATM machine fees take a bite out of your hard, earned savings. The convenience of using automated teller machines is an increasingly pricey one. Use them sparingly. Most banks and credit union charge you to use other institution's machine but not there own. Check into the fees before you use the ATM machine.
Saturday, October 1, 2011
October is Financial Planning Month
A financial plan is like any map; it helps you get where you want to go. Where do you want to go?
Without an understanding of your financial goals, it's hard to figure out how to manage your money to get what you want. First, you need to understand how you feel about money and how you want to use it to achieve your goals. Do you want to save to get an an education or buy something like a car?
A financial plan can help you get your money aligned with your life prorities and achieve your goals. Start with the first two elements of a successful financial plan: budgeting and savings and investing.
A budget let's you take control of your money by spending it only on what's important to you. No needless spending. Saving means paying yourself first. When you get paid, deposit your allowance or check into savings account instead of spending it without thought. Once you are committed to savings, then you can create an investment strategy that works for you. You'll assess your risk tolerance and invest enough to reach your goal.
Keeping reading for more information on these topics and others.
Without an understanding of your financial goals, it's hard to figure out how to manage your money to get what you want. First, you need to understand how you feel about money and how you want to use it to achieve your goals. Do you want to save to get an an education or buy something like a car?
A financial plan can help you get your money aligned with your life prorities and achieve your goals. Start with the first two elements of a successful financial plan: budgeting and savings and investing.
A budget let's you take control of your money by spending it only on what's important to you. No needless spending. Saving means paying yourself first. When you get paid, deposit your allowance or check into savings account instead of spending it without thought. Once you are committed to savings, then you can create an investment strategy that works for you. You'll assess your risk tolerance and invest enough to reach your goal.
Keeping reading for more information on these topics and others.
Friday, September 30, 2011
Money Expo - October 22
Come learn about valuable ways to manage your money and grow your savings. Lucky winners may receive a free iPod Touch or an eBook reader!
The Virginia Beach Public Library invites all teens, age 12 to 18, to participate in the Money Expo on Saturday, October 22, 11 a.m. to 1 p.m. at the M.E.O. Central Library.
Teens can talk with experts and learn about real-life topics like managing checking and saving accounts, budgeting, investing and more. They can even play to win at "Money Jeopardy".
There's even more ---snacks, giveaways and prizes! Registration for this FREE event begins on October 1, 2011. To register, call the library at (757) 385-1050.
The Virginia Beach Public Library invites all teens, age 12 to 18, to participate in the Money Expo on Saturday, October 22, 11 a.m. to 1 p.m. at the M.E.O. Central Library.
Teens can talk with experts and learn about real-life topics like managing checking and saving accounts, budgeting, investing and more. They can even play to win at "Money Jeopardy".
There's even more ---snacks, giveaways and prizes! Registration for this FREE event begins on October 1, 2011. To register, call the library at (757) 385-1050.
Thursday, September 29, 2011
UR $ 4 Life, October 8, Central Library
Everybody needs a little help understanding money. It's hard to figure it all out. Your library offers programs and resources just for teens to help you get more bang for your buck. Snacks and prizes too!
Sign up for UR $ 4 Life on October 8, 1 to 2 p.m. at the Central Library to have some fun and learn something new. It's your money for your life – we’ll help you be smart about it. Call (757) 385-0150 to register.
Sign up for UR $ 4 Life on October 8, 1 to 2 p.m. at the Central Library to have some fun and learn something new. It's your money for your life – we’ll help you be smart about it. Call (757) 385-0150 to register.
Wednesday, September 28, 2011
Savings Account Strategies
It’s finally payday! But what are you going to do with your hard-earned money? Go shopping, put some away for college, see a movie, take a trip? No matter what you decide, consider making your savings account your first stop.
A savings account can ...
keep your money safe
help you earn more money
cash your check
provide access to your money
A savings account can do all of these things for you! There are different types of savings accounts Read MoneyTalks for Teens on Saving Account Strategies to learn more. On page 2,take the survey to figure out which type of savings account is best for you.
A savings account can ...
keep your money safe
help you earn more money
cash your check
provide access to your money
A savings account can do all of these things for you! There are different types of savings accounts Read MoneyTalks for Teens on Saving Account Strategies to learn more. On page 2,take the survey to figure out which type of savings account is best for you.
Tuesday, September 27, 2011
Why Budget?
Why should you budget when your parents take care of all your expenses or you don't have a regular income?
Budgeting allows you to --
start saving for the future
control mindless spending
afford things that you really want
Yes, it's true! Track your expenses for just one day. You'll be very surprised to find out how much money you spend without thinking about it. You eat fast food after school, right? How much did you spend?
Budgeting allows you to know how much you are spending and make decisions about what you want to spend your money on. It's all about taking control of your life and setting priorities. It's not hard!
Before long, you'll have the money that you need to purchase the things that you really want. Find out more about your money beliefs and how they shape your budget in MoneyTalks Teen Guide My Money Personality.
Monday, September 26, 2011
Welcome to the Club
It’s often easier for your parents to give you cash than a lesson in how to manage it. If fact, a recent study of American families shows that many kids are in debt before the age of 21. Don’t let this happen to you!
Here's a few tips to get you started:
Allowance. Ask for a allowance for doing small chores at home. It helps you understand the value of money and also shows your parents that you get it too.
Pay Yourself First. The next time that your parents visit their bank or credit union, go with them and ask to open up an account of your own. Be smart with the money that you earned doing chores by depositing it in your account. It's called paying yourself first.
Make Smart Choices. Before your next purchase, stop and think about how much that items costs. It took you a while to earn and save enough money for that purchase. Is it worth it? Spending money relates directly to your personal choices.
Learn More. Invest in yourself --- keep reading this blog to learn more! We'll post information about managing and investing your money.
It's your money --- we’ll help you be smart about it.
Here's a few tips to get you started:
Allowance. Ask for a allowance for doing small chores at home. It helps you understand the value of money and also shows your parents that you get it too.
Pay Yourself First. The next time that your parents visit their bank or credit union, go with them and ask to open up an account of your own. Be smart with the money that you earned doing chores by depositing it in your account. It's called paying yourself first.
Make Smart Choices. Before your next purchase, stop and think about how much that items costs. It took you a while to earn and save enough money for that purchase. Is it worth it? Spending money relates directly to your personal choices.
Learn More. Invest in yourself --- keep reading this blog to learn more! We'll post information about managing and investing your money.
It's your money --- we’ll help you be smart about it.
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