15 minute read
SESSION #5 BONUS MATERIAL
them to your group’s decisions. Directions : While other groups are presenting, make note of other group’s budget decisions and compare
WHOLE GROUP REFLECTION
From listening to the presentations today, what do you think is the most important piece of a budget?
REMINDERS FOR FIELD TRIP
The RTSWS FIELD TRIP is…
What do I need to turn in or do ahead of the trip? Be sure to turn in your permission slip!
RTSWS SPRING MENTORSHIP COMING SOON!
What is the Spring Mentorship?
You will be paired with a mentor that you will work with for all 5 sessions. You will work on resume writing, interview skills, self-advocacy, LinkedIn and skills for college and beyond. You can utilize your mentor to help you talk through college and career options as well!
How do you enroll for RTSWS Spring
Mentorship? Go to the RTSWS app to sign up! Login to your RTSWS app and click “Enroll for Spring Mentorship.”
SESSION 5 BONUS
ARTICLE
“Investments for Beginners” by Arielle O’Shea, NerdWallet (May 21, 2019)
www.nerdwallet.com/article/investing/investments-for-beginners
The biggest misconception about investing is that it’s reserved for the rich.
That might’ve been true to some extent 10 years ago. But that barrier to entry is gone today, knocked down by companies and services that have made it their mission to make investment options available for everyone, including beginners and those who have just small amounts of money to put to work.
In fact, with so many investments now available to beginners, there’s no excuse to skip out. And that’s good news, because investing is a great way to grow your wealth.
Why is investing important?
You might have heard someone reminisce about how cheap gas prices (or some other product or service) used to be back in the day. This is because inflation erodes the value of money as years go by.
Maybe you’ve been keeping your money stuffed under your mattress or in a savings account — those are options — but a better way to save for longer-term goals is to invest. By investing, you can better combat inflation, increasing your chances of being able to afford the same amount of goods and services in the future that you can today.
Investing helps you make your money work for you because of compounding. Compound earnings means that any returns you earn are reinvested to earn additional returns. And the earlier you start investing, the more benefit you gain from compounding.
Getting started - Before you jump in, there are some things to think about.
Your goals and time horizon
Consider what goal you are wanting to achieve by investing and your time horizon, the length of time you have to invest before reaching that goal. If the time horizon to your goal is short, investing might not be the best solution for you. Check out our article on how to invest for short-term or long-term goals.
Risk tolerance and diversification
All investments have some level of risk and the market is volatile, it moves up and down over time. It’s important for you to understand your personal risk tolerance. This means gauging how comfortable you are with risk or how much volatility you can handle.
When investing, a good rule of thumb is not to put all of your eggs in one basket. Instead, diversify. By spreading your dollars across various investments, you can reduce investment risk. This is why the investments we outline below use mutual funds or exchange-traded funds for the most part, which allows investors to purchase baskets of securities instead of individual stocks and bonds.
6 ideal investments for beginners
Here are six investments that are well-suited for beginner investors: • 401(k) or employer retirement plan • A robo-advisor • Target-date mutual fund • Index funds • Exchange-traded funds (ETFs) • Investment apps
1. A 401(k) or other employer retirement plan
If you have a 401(k) or another retirement plan at work, it’s very likely the first place you should put your money — especially if your company matches a portion of your contributions. That match is free money and a guaranteed return on your investment.
You can contribute up to $19,500 to a 401(k) in 2020 (or $26,000 if you’re 50 or older), but that doesn’t mean you have to contribute that much. The beauty of a 401(k) is that there typically isn’t an investment minimum.
That means you can start with as little as 1% of each paycheck, though it’s a good idea to aim for contributing at least as much as your employer match. For example, a common matching arrangement is 50% of the first 6% of your salary you contribute. To capture the full match in that scenario, you would have to contribute 6% of your salary each year. But you can work your way up to that over time.
When you elect to contribute to a 401(k), the money will go directly from your paycheck into the account without ever making it to your bank. Most 401(k) contributions are made pretax. Some 401(k) s today will place your funds by default in a target-date fund — more on those below — but you may have other choices. Here’s how to invest in your 401(k).
To sign up for your 401(k) or learn more about your specific plan, contact your HR department.
2. A robo-advisor
Maybe you’re on this page to eat your peas, so to speak: You know you’re supposed to invest, you’ve managed to scrape together a little bit of money to do so, but you would really rather wash your hands of the whole situation. There’s good news: You largely can, thanks to robo-advisors. These services manage your investments for you using computer algorithms. Due to low overhead, they charge low fees relative to human investment managers — a robo-advisor typically costs 0.25% to 0.50% of your account balance per year, and many allow you to open an account with no minimum.
They’re a great way for beginners to get started investing because they often require very little money and they do most of the work for you. That’s not to say you shouldn’t keep eyes on your account — this is your money; you never want to be completely hands-off — but a robo-advisor will do the heavy lifting.
And if you’re interested in learning how to invest, but you need a little help getting up to speed, robo-advisors can help there, too. It’s useful to see how the service constructs a portfolio and what investments are used. Some services also offer educational content and tools, and a few even allow you to customize your portfolio to a degree if you wish to experiment a bit in the future.
3. Target-date mutual funds
These are kind of like the robo-advisor of yore, though they’re still widely used and incredibly popular, especially in employer retirement plans. Target-date mutual funds are retirement investments that automatically invest with your estimated retirement year in mind.
Let’s back up a little and explain what a mutual fund is: essentially, a basket of investments. Investors buy a share in the fund and in doing so, they invest in all of the fund’s holdings with one transaction.
A professional manager typically chooses how the fund is invested, but there will be some kind of general theme: For example, a U.S. equity mutual fund will invest in U.S. stocks (also called equities).
A target-date mutual fund often holds a mix of stocks and bonds. If you plan to retire in 30 years, you could choose a target-date fund with 2050 in the name. That fund will initially hold mostly stocks since your retirement date is far away, and stock returns tend to be higher over the long term.
Over time, it will slowly shift some of your money toward bonds, following the general guideline that you want to take a bit less risk as you approach retirement.
4. Index funds
Index funds are like mutual funds on autopilot: Rather than employing a professional manager to build and maintain the fund’s portfolio of investments, index funds track a market index.
A market index is a selection of investments that represent a portion of the market. For example, the S&P 500 is a market index that holds the stocks of roughly 500 of the largest companies in the U.S. An S&P 500 index fund would aim to mirror the performance of the S&P 500, buying the stocks in that index.
Because index funds take a passive approach to investing by tracking a market index rather than using professional portfolio management, they tend to carry lower expense ratios — a fee charged based on the amount you have invested — than mutual funds. But like mutual funds, investors in index funds are buying a chunk of the market in one transaction.
Index funds can have minimum investment requirements, but some brokerage firms, including Fidelity and Charles Schwab, offer a selection of index funds with no minimum. That means you can begin investing in an index fund for less than $100.
5. Exchange-traded funds (ETFs)
ETFs operate in many of the same ways as index funds: They typically track a market index and take a passive approach to investing. They also tend to have lower fees than mutual funds. Just like an index fund, you can buy an ETF that tracks a market index like the S&P 500.
The main difference between ETFs and index funds is that rather than carrying a minimum investment, ETFs are traded throughout the day and investors buy them for a share price, which like a stock price, can fluctuate. That share price is essentially the ETF’s investment minimum, and depending on the fund, it can range from under $100 to $300 or more.
Because ETFs are traded like a stock, brokers used to charge a commission to buy or sell them. The good news: Most brokers, including the ones on this list of the best ETF brokers, have dropped trading costs to $0 for ETFs. If you plan to regularly invest in an ETF — as many investors do, by making automatic investments each month or week — you should choose a commission-free ETF so you aren’t paying a commission each time. (Here’s some background about commissions and other investment fees.)
6. Investment apps
Several investing apps target beginner investors.
One is Acorns, which rounds up your purchases on linked debit or credit cards and invests the change in a diversified portfolio of ETFs. On that end, it works like a robo-advisor, managing that portfolio for you. There is no minimum to open an Acorns account, and the service will start investing for you once you’ve accumulated at least $5 in round-ups. You can also make lump-sum deposits.
Acorns charges $1 a month for a standard investment account and $2 a month for an individual retirement account. Our unsolicited advice: Max out that IRA account before you start using the standard investment account — there are tax perks to the IRA that you don’t want to miss. (Learn more about IRAs here.)
Another app option is Stash, which helps teach beginner investors how to build their own portfolios out of ETFs and individual stocks. Stash carries just a $5 account minimum and has a similar fee structure to Acorns, though balances that top $5,000 are charged 0.25% of that balance per year, rather than the flat fee.
ARTICLE
https://www.thebalancecareers.com/top-jobs-for-finance-majors-2064048
Finance majors learn about a variety of investment vehicles, and this knowledge can help financial planners to advise clients about how to manage their finances. Finance majors can decipher trends in the securities markets and apply this perspective to their planning sessions.
1. Financial Planner
Financial planners must crunch numbers and apply principles of accounting in order to devise plans suitable for individual investors. They also need to inspire trust in people and promote their services. Therefore, finance majors with strong interpersonal skills and persuasive abilities will be most likely to succeed in this profession.
Salary and Employment Outlook: According to the Bureau of Labor Statistics (BLS), personal financial advisors earned an average of $90,640 in May 2017 and jobs are predicted to expand at a much faster than average rate of 15% through 2026.
2. Financial Analyst
Financial analysts research stocks, bonds, companies, and industries to assist bankers, investors, and corporate finance officers with mergers, acquisitions, and stock/bond offerings, as well as corporate expansions and restructuring. They can capitalize on their finance major training as they dissect financial statements and other financial data.
Financial analysts build financial models and conduct complex quantitative analyses. Financial analysts also produce reports detailing their findings and present their analyses to other members of the banking or finance team. Salary and Employment Outlook: According to the BLS, financial analysts earned an average of $84,300 in May 2017 and jobs are predicted to grow at a faster than average rate of 11% through 2026.
3. Investor Relations Associate
Finance majors with strong writing, organizational, and communication skills can thrive in this role. Investor relations professionals prepare and present financial information about their company or corporate clients to investors, analysts, and business media.
Investor relations professionals must digest, interpret, highlight, and present information from financial statements. The analytical and software tools developed through their finance major training facilitate this process.
Salary and Employment Outlook: According to Payscale, investor relations associates earn an average salary of $64,352.
4. Budget Analyst
Budget analysts apply principles of finance to projects and proposals in the business, educational, governmental, and not-for-profit sectors. They analyze budgets and evaluate the financial impact of continuing ventures and new ventures.
Budget analysts must have refined communication skills because they interview managers in order to gather information for proposals. They also train staff regarding the budget development processes for their organization. Finance majors develop the essential analytical and communication skills needed to become a successful budget analyst.
5. Actuary
Actuaries play a leadership role in financially oriented businesses such as insurance, banking, rating agencies, and accounting firms. The finance graduate with strong mathematical skills is ideally positioned to calculate the likelihood of various events and to assess the financial consequences for those outcomes.
Just like the finance major, actuaries manipulate software to perform calculations and represent their findings. They present their recommendations to managers at their firm and convince others of the soundness of their decisions.
Salary and Employment Outlook: According to the BLS, actuaries earned an average of $101,560 in May 2017 and jobs are predicted to grow at a much faster than average rate of 22% through 2026.
6. Accountant
Finance majors learn to construct, interpret, and critique financial statements while completing the accounting component of their studies. Thus, they become capable of carrying out complex accounting work in financially oriented industries.
“Best Jobs for Graduates With a Finance Degree” by Mike Profita, The Balance retrieved from: https:// www.thebalancecareers.com/top-jobs-for-finance-majors-2064048
Students of finance develop a number of accountancy skills as they learn to analyze business problems with precision and attention to detail, which prepares them for the world of accounting. Just like accountants, finance majors learn to present financial information to clients and colleagues by using charts, graphs, and other visual aids.
Entry level accounting jobs can be gateway jobs leading to corporate financial management positions, or leadership positions with non-profits and government agencies.
Salary and Employment Outlook: According to the BLS, accountants earned an average of $69,350 in May 2017 and jobs are predicted to grow at a faster than average rate of 10% through 2026.
7. Credit Analyst
Credit analysts evaluate the financial standing of loan prospects and assess the risks involved with offering them financing. Finance majors learn to appraise the financial viability of entities and interpret their financial records and data. The investigative mindset of a finance major would enable the credit analyst to scrutinize the legitimacy of financial information furnished by clients.
Finance majors analyze trends in industries that can impact the ability of organizations to generate the income necessary to repay loans. They have the communication skills necessary for credit analysts to extract information from prospective clients and convey their analyses to colleagues.
Salary and Employment Outlook: According to the BLS, credit analysts earned an average of $71,290 in May 2017 and jobs are predicted to grow by as much as 8% on average through 2026.
8. Attorney
Lawyers in many areas of practice, including divorce, product liability, civil litigation, corporate, labor, and securities law, benefit from a knowledge of finance. Attorneys who investigate financial irregularities must read and understand financial statements. Lawyers in civil cases need the skills to estimate appropriate compensation for settlements.
Research and analytical skills developed by finance majors enable attorneys to prepare their cases. Presentation skills and knowledge of presentation software help attorneys to deliver arguments and prepare exhibits.
Salary and Employment Outlook: According to the BLS, lawyers earned an average of $119,250 in May 2017 and jobs are predicted to grow by as much as 8% on average through 2026.
9. Commercial Real Estate Agent
Finance majors with strong verbal skills and a sales orientation should consider a career as a commercial real estate agent. Commercial real estate agents analyze the business plans and financial status of clients in order to recommend appropriate spaces for their enterprises.
When listing a property, brokers must estimate the value of the property based on its financial potential for prospective buyers. Agents advise clients about options for financing property acquisitions and launching new businesses.
Salary: According to Payscale, commercial real estate agents earn an average salary of about $94,500.
10. Business Teacher
Finance majors hone the communication and presentation skills that are essential to the teaching profession. Business teachers tap a broad knowledge of business as they instruct high school students about
the fundamentals of accounting, management, marketing, and investments.
Finance majors with an intense curiosity about the business world and an enthusiasm for business issues are well suited for this role. Individuals who earn advanced degrees in business can also pursue teaching jobs at junior and four-year colleges.
Salary: According to Payscale, business teachers earn an average salary of $41,654.
DON’T FORGET!
