Why Should I Invest?

“Simply put, you want to invest in order to create wealth.  It’s relatively painless, and the rewards are plentiful. “

This article from The Motley Fool website explains why investing is a smart idea.  The article begins with information about the importance of goals.  Then asks the question, “What are you saving for?”.  The article also explains the power of compounding and provides specific examples to illustrate how time, rate of return, and age can make a tremendous difference.

The article also summarizes 9 common pitfalls to avoid including: doing nothing, starting late, investing before paying down credit card debt, etc.

Note:  this is one of a series of articles provided by The Motley Fool website.  Hopefully, students will use this article as a starting point and will use more of the educational materials available on this site.

For more information, click here.

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Stress the importance of beginning a savings and investment program sooner rather than later.
  • Explain the power of compounding examples in this article to illustrate the difference in potential returns.
  • Discuss the 9 common pitfalls that often keep people from starting a savings and investment program.

Discussion Questions

  1. What are the advantages of starting an investment program sooner rather than later?
  2. Where can you get the money you need to begin a savings and investment program?
  3. What do you consider the biggest pitfall that keeps you from starting a savings and investment program?

How Much You Have to Earn to Be Considered Middle Class in Every US State

“Pew defined middle class households as those earning 67%-200% of a state’s median income.”

A recent analysis from Pew Charitable Trusts’ Stateline blog found that the middle class shrunk in every state in the U.S. between the years of 2000 and 2013–the most recent data available.  This article by Libby Kane and Andy Kiersz also provides a detailed table that displays the median income and middle class incomes for each of the 50 states.  Finally, the information in this article points out that the definition of middle class often depends on where you live.  For example, you can feel middle class even if you earn$250,000 a year in some areas of the country which is about five times the $52,250 median income for the entire United States.

For more information, click here. 

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Discuss what it means to be middle class in the United States.
  • Stress how income relates to financial planning, investing, and the time value of money.

Discussion Questions

  1. While the median income for the United States is $52,250, the median income and the middle class incomes for each state vary. What factors account for the difference in these income amounts from one state to the next?
  2. Assume you are offered a new position within your company that will pay $6,000 more than your current annual salary. If you take the new position, you will have more responsibility and it will require that you work longer hours and travel away from home and family on a regular basis.  Do you feel the extra money is worth the changes that will be required if you take the new position?
  3. If you decide to take the new higher-paying position, what would you do with the extra money?

Here’s How to Become a 401k Millionaire

“If your job offers you a 401k or similar retirement plan, you’ve got one of the very best investment tools at your disposal.”

To become a 401k millionaire, all you need is a paycheck, reasonable options in your retirement plan, and time.  This article also explains that once you start putting money into the plan, the tax-deductible investments grow and are tax-deferred until you begin to withdraw money from your 401k account.  As an added bonus, your employer may match all or part of the money you contribute to your 401k account.

A very useful table that shows how many years it will take for you to become a millionaire based on how much you (and your employer) invest each month with different rates of return is also included in this article.  And there are also suggestions for increasing the amount that you save or invest in a 401k account or other savings or investment accounts.

For more information go to http://www.fool.com/retirement/401k/2014/09/27/heres-how-to-become-a-401k-millionaire.aspx

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Stress the importance of beginning an investment program sooner rather than later.
  • Discuss ways to save the money needed to start an investment program.

Discussion Questions

  1. Why is it important to begin saving and investing sooner rather than later?
  2. Assume you (and your employer) invest $250 a month in your 401k account. How long will it take for you to become a millionaire if your investments earn annual returns of 10 percent?  (Note:  Using the table in the article, the answer is 35.5 years.)