Appendix A.8 Investment Options Resource: The CITY A Financial Life Skills Resource Prior Knowledge: List some of your short-term goals and long-term goals. How much money will you need for each of the goals? What is your plan for making these goals a reality? How could you save for a large purchase? What are savings? What do you know about investments? Activity: Have students work through the following information using a strategy (e.g. think-pair-share, jigsaw, concept circle, etc.) Instruction: People can choose from a wide variety of investments. This chart shows you some things to consider about some of the main types of investments. Type Expected Return Risk Liquidity Savings accounts, a fixed low to moderate savings may be • usually • • Guaranteed annual rate withdrawn at any time principal amount is Investment • GICs sometimes usually insured, but GICs and Certificates (GICs), • • some tied to performance interest rates can be term deposits must term deposits: of an index or other fixed or variable be held to maturity, standard but many allow for Money deposited early redemption or with banks, trust cashing out at a cost companies and credit unions Treasury bills: determined by very low not redeemable, but • • • difference between can usually be sold Short-term (less than purchase price and quickly through 1 year) debt value at maturity investment dealers securities issued by government Equities: may pay regular moderate to high shares traded on • • • dividends to share stock exchanges are depends on size and Shares in ownership holders • usually quite easy to stability of company, of a company (also sell potential return management, called stocks) • may depend entirely competition, etc. shares that aren't • on changes in share listed on an exchange may be
Appendix A.8 Investment Options Resource: The CITY A Financial Life Skills Resource Prior Knowledge: List some of your short-term goals and long-term goals. How much money will you need for each of the goals? What is your plan for making these goals a reality? How could you save for a large purchase? What are savings? What do you know about investments? Activity: Have students work through the following information using a strategy (e.g. think-pair-share, jigsaw, concept circle, etc.) Instruction: People can choose from a wide variety of investments. This chart shows you some things to consider about some of the main types of investments. Type Expected Return Risk Liquidity Savings accounts, Guaranteed Investment Certificates (GICs), term deposits: Money deposited with banks, trust companies and credit unions • usually a fixed annual rate • GICs sometimes tied to performance of an index or other standard • low to moderate • principal amount is usually insured, but interest rates can be fixed or variable • savings may be withdrawn at any time • some GICs and term deposits must be held to maturity, but many allow for early redemption or cashing out at a cost Treasury bills: Short-term (less than 1 year) debt securities issued by government • determined by difference between purchase price and value at maturity • very low • not redeemable, but can usually be sold quickly through investment dealers Equities: Shares in ownership of a company (also called stocks) • may pay regular dividends to share holders • potential return may depend entirely on changes in share • moderate to high • depends on size and stability of company, management, competition, etc. • shares traded on stock exchanges are usually quite easy to sell • shares that aren't listed on an exchange may be