Creating Wealth

Creating WealthA primer for high school students

INCOME

WEALTH

Sources of Income

• Allowance• Job• Inheritance• Career• Investments

Return on Investment Formula

Investment Proceeds – Cost of Investment____________________________________

Cost of Investment

Future Value of a Single Sum

• PV is amount invested• r is the interest rate• n is the number of investment periods

Future Value with Compounding

• m is the compounding frequency, • e.g., semi-annual would be 2

Power of Compound Interest

• Invest a sum and keep the interest in • “interest on interest”

RISK RETURN

Wealthy Barber

Save 10% of what you earn...FIRST!

TAX FREE SAVINGS ACCOUNT

• $5000 annually• All interest\profits not taxable

http://www.tfsa.gc.ca/

Warren Buffet

• Buy companies’ stocks whose products you use everyday• Buy and Hold

Alternatives

• Collectibles– Trading cards– Art– Comic books– Antiques

• Gold, Silver

Fun Websites

• Compound Interest Calculator:– http://www.calculatorweb.com/calculators/comp

oundcalc.shtml

• Chartgame (stock trading simulation):– http://chartgame.com/