21st Century Student FinLit -Getting Personal SW

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C H A P T E R 11

INVESTING 101

PRODUCT PREVIEW

Learning Goals By the end of this chapter you will be able to: • List traditional investment asset classes • Compare the wealth building features of stocks, bonds, and real estate

I f you'd made a $1000 investment in Apple Corporation in 1980, how much would it be worth today? What If you had put that money in a savings account instead, earning 2% annually? How much would you have? In Chapter 1, you learned that money alone doesn’t build wealth. To build wealth, a portion of your income must be used to acquire the ownership of things that hold or increase their value over time. Money must be “put to work” through investing . How potentially powerful is investing? If you had invested $1000 in Apple in 1980, you would have a whopping $320,000 today! If you had put that money in a savings account, you would have only $2050. Not many investments have the kind of appreciation seen in the Apple stock, but investing is a powerful tool for building wealth. In this chapter, we’ll explore basic investment terms and concepts, because as a financially literate person, you should know a bit about these things!

• Equate risk with return • Explain the purpose of

investment diversification

• Define capital gains • Explain the capital gains tax • (Opt.) Argue for or against Wall Street reforms

Chapter Resources: An investment calculator can tell you how much money you need to contribute each month to an account in order to arrive at a specific savings goal within a certain time period. Bankrate.com has an easy to use investment calculator. The online resource to explore for this chapter is learningmarkets.com . Although this is a commercial site offering courses in investing, it has an excellent selection of free videos and essays explaining basic to complex investment and money concepts.

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