The Motley Fool Investment Guide For Teens Government/Economics General Preparatory Summer Reading Assignment

Transcription

1 The Motley Fool Investment Guide For Teens Government/Economics General Preparatory Summer Reading Assignment Directions: Read the chosen text and answer the questions below. Responses need to be thorough, but not in complete sentences. This assignment is to be returned to your Government/Economics GP teacher on the second day of the school year. Introduction: 1. According to the authors what does financial independence mean? 2. Why do the authors believe they can help you achieve financial independence (5 reasons)? A. D. E. Step One: Set Goals (and Reach Them) 3. I want to be: Estimated Cost: 4. I want to do: 5. I want to own: 6. What three factors have the biggest impact on how much compound growth your investments see? A. Step Two: Make and Save Money 7. Bill Gates left Harvard to start Microsoft. Michael Dell launched Dell Computers from his dorm room at the University of Texas. Considering your own strength s and interests, brainstorm some potential moneymaking ideas for you, and jot your best one down. _

2 8. On average, how much more money a year can someone with a college bachelor s degree expect to make, compared to a high school graduate? 9. Read the seven tips on How to Land a Good Job (or Any Job) and rank what you believe to be the top three tips. A. 10. A general guideline for working adults is to save how much of their salary per year? Step Three: Be Smart About Your Money 11. What extremely important economic practice can help almost every teen or adult, yet few ever do it? (Hint: Money Inflows and Outflows) 12. Compare and contrast banks and credit unions by identifying two ways they are alike and two ways they are different. Alike Different A. A. 13. What type of banking investment allows you to earn a higher interest rate, but prevents you from having access to that money for a certain amount of time, without incurring a penalty? 14. What type of investment often allows you to earn a higher interest rate than a CD, offers a variety of types, and may even let you put off or avoid paying taxes on your earnings? (Hint: You are essentially loaning the government money, and they pay you interest in return) 15. Using the list provided to you under Checking Out Banks, identify what you believe to be the four most important questions you need to ask when shopping for a bank. D. Step 4: Avoid Financial Blunders 16. If you smoke a pack of cigarettes a day, at $6 a pack, how much can you expect to spend on them in a year? If you smoke at that rate for thirty years, how much money can you expect to lose towards investment?

3 17. When people are living beyond their means, they often do so using credit cards. While credit cards can be tremendously harmful to your investment plans, they can also be a blessing. Identify three ways that credit cards can be beneficial when used properly. 18. Credit cards can also be a major detriment to fulfilling your investment goals. What are three of the biggest problems that credit pose to the average American? A. D. E. Step 5: Know What to Expect 19. What does H = R/E stand for? 20. What does the above formula mean? 21. What does it mean when a company goes public? 22. Identify four common reasons why stocks increase and decrease in value. Increase Decrease A. A. D. D. 23. Why is it important to invest in the stock market for the long term and expect to wait? 24. While you should expect to lose some money in the stock market, how can you increase the odds that you will come out ahead in the long-run? Step 7: Actually Invest 25. Match the type of IRA with its definition A. Traditional Roth You invest post-tax money so there are no costs when you use the money years later You invest pre-tax money and pay taxes on it when you use the money years later

4 Step 10: Finding Great Companies 26. Who do the authors identify as the man you want to emulate when investing? 27. Using the brainstorming activity presented in the chapter, list 3 companies you would consider investing in. Step 11: Tracking Your Companies 28. What are the four things Warren Buffet looks for when investing in companies? D. 29. What is a company s stock price ultimately tied to? 30. Identify the two different types of markets by matching them accordingly below. A. Bull Bear An optimistic market that is doing well A market that is not performing well Step 13: Understanding the Business 31. What two items are good to focus on in regards to analyzing a company s income statement? 32. In the old days you had to call or write a company in order to get a company s financial reports. Today, it is much easier to get the goods. Today, what simple way is suggested to access a company s financial standings? Step 15: Managing Your Portfolio 33. What economic term is used to describe the balance of investing in a combination of both large and small companies? 34. How often do the authors suggest you look at the progress of your investments? 35. Identify three valid reasons to consider selling your investments.

5 Our Grand Conclusion 36. What two things do the authors hope you have more conviction to do after reading this book? A. Post-Reading Reflections 37. After reading the book, identify the three best pieces of advice given to you by the authors. 38. Which chapter did you find most beneficial and why? 39. Does reading this book increase or decrease your interest in economics as you enter your senior year? 40. Did you find the book to be beneficial in preparing you financially for adulthood? Explain.