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Author: 1960TR3 Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 750234  
Subject: Good News... Date: 9/22/2000 3:32 PM
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...for the future of Early Retirement (or is it Retired Early <S>).

I attended an open house at my SO's (significant other) daughter's high school last night. She has a class called "Consumerism". A section of that class is "investing for the future"! I was absolutely thrilled....that is, until I heard that I had been "volunteered" by the daughter to "guest teach" that topic for a day. Actually, I'm thrilled at the opportunity but I'm a little hesitant at my ability to teach/encourage 6 classes how to invest in less than an hour each.

My first thoughts are:

1)"The Magic of Compound Interest".
2)"What You Might Really Need for Financial Independence"
3)"The Best/Worst Places to Keep Your Money"
4)"Taking Advantage of IRA's & Employee Investment Programs"
5)"How You Can Easily Save More Than You Think (LBYM)"

I'm wondering if some of my friends here might have some additional ideas and/or examples that 150 17yr olds would appreciate.

I actually will have the opportunity to touch a few lives here and thought, from previous threads lamenting the lack of investment education in our schools today, that many of you would take some satisfaction that this is happening.

Thanks!

Bob

PS: Please don't tell me to "home school" <G>
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Author: ResNullius Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19097 of 750234
Subject: Re: Good News... Date: 9/22/2000 3:46 PM
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Excellent idea. You might want to stick with 1, 3, and 4. The other two items might not grab their interest like 1, 3, and 4. I also would be surpised if they actually will absorb more than one or two items in a single session, so I would limit the presentation to no more than three items. This should take all the time you have anyway, with a little time left for Q&A. Good luck.

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Author: inparadise Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19099 of 750234
Subject: Re: Good News... Date: 9/22/2000 3:52 PM
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There was a long thread with this on either the Mechanical Investing or Foolish Workshop board earlier this year.

If you find it, I sure would be interested in your jogging my memory as to where it is. It was very long.

Good luck,

InParadise

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Author: coalbearer Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19103 of 750234
Subject: Re: Good News... Date: 9/22/2000 4:24 PM
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Wow! That whole program (what's going on in class as well as your participation) sounds great!

I think numbers 1 and 3 of your ideas will have the biggest impact on high schoolers. If this isn't already covered by the classes, I'd compare your average returns to credit debt (+10 to +12% in an index compared with -10% to -22% in consumer debt). That's a subject that some of them should be dealing with soon, though you could easily include it in a compound interest discussion.

What a great opportunity! Good luck with that!

Alex.


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Author: JAFO31 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19106 of 750234
Subject: Re: Good News... Date: 9/22/2000 4:35 PM
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1960TR3: 'My first thoughts are:

1)"The Magic of Compound Interest".
2)"What You Might Really Need for Financial Independence"
3)"The Best/Worst Places to Keep Your Money"
4)"Taking Advantage of IRA's & Employee Investment Programs"
5)"How You Can Easily Save More Than You Think (LBYM)"'


I am with the other re #1; and dig out Einstein's quote about interest.

The other issue, and this is not phrased in PR eye catching terminology, is spending plans (a/k/a budgets) and deferred gratification. "I gotta have it, and I gotta have it NOW" slows down or derails so many people and their financial plans. AND, I know that this is a tough concept to sell to 16-18 year olds who consider themselves bullet proof and with the whole world at their feet available to them.

Just my $0.02. Regards, JAFO





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Author: studentinvestor1 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19107 of 750234
Subject: Re: Good News... Date: 9/22/2000 4:59 PM
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Here's an article that I've found thought-provoking for kids.

http://www.fool.com/FamilyFool/1997/970820HowMoneyGrows.htm

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Author: dwade Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19108 of 750234
Subject: Re: Good News... Date: 9/22/2000 5:05 PM
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If you can get the magic of compound interest into their heads, you'll have done them an amazing service. I actually had a high school computer science instructor point out that if you really cranked on your schoolwork it was possible to graduate a semester early. If you then worked for, say, 6 months at a minimum wage job and saved all that money and set it to compounding, it would be worth a ton on retirement.

I don't know if anybody ever did it, but the part about compounding stuck with me.

(I did a quickie calculation, and assuming market rates of return and retirement at 60 you can end up with around 400K-600K depending on your exact assumptions. If you assume Buffett-like returns let's just say my calculator overflows!).

Doug


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Author: wcabbott One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19113 of 750234
Subject: Re: Good News... Date: 9/22/2000 5:55 PM
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Bob,

A very illustrative anecdote is the one Warren Buffet uses for the actual cost of an expensive automobile. That is, the lost opportunity of compounding if you put the money into high-priced iron instead of basic transportation.

As I recall when I was seventeen (about 37 years ago), the USA's car culture had a huge impact on me. When you're that age you can't wait to get a shiny new car. If you can show the kids how much this really costs over a lifetime of earning, you may make a significant impression.

Regardless, you have a real opportunity to make a difference where it counts. Make the best of it.

wcabbott

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Author: Rhett76 Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19117 of 750234
Subject: Re: Good News... Date: 9/22/2000 6:47 PM
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My SO said the most meaningful day of her high school career occured when a guest speaker addressed her class concerning Credit Card Debt.

He used the example of a sofa. Even brought in slides of it. And proposed what would happen if they bought that sofa today and made only minimum payments on a credit card.

As she remembers it, doing so, would have taken a total of 30 years to pay off, and she would have ended up spending 3 times the original price of the sofa in intrest.

This might be an excellent first class. Then in the second class you can tell them about the wonderful things that can happen when you can have compunding growth working for you :)

-rhett

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Author: ravinamk Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19118 of 750234
Subject: Re: Good News... Date: 9/22/2000 6:48 PM
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>>
"investing for the future"...
I had been "volunteered" by the daughter to "guest teach" ...
My first thoughts are:
1)"The Magic of Compound Interest".
2)"What You Might Really Need for Financial Independence"
3)"The Best/Worst Places to Keep Your Money"
4)"Taking Advantage of IRA's & Employee Investment Programs"
5)"How You Can Easily Save More Than You Think (LBYM)"
I'm wondering if some of my friends here might have some additional ideas and/or examples that 150 17yr olds would appreciate....
>>

17-yr-olds??
Serve FOOD! First thing that came to mind. Asset allocation pie charts with real pies. Take a section of it away if they make un-Foolish choices when you give them a pop quiz at the end of the day.

Curious to see the other responses. <g>
Have fun! To paraphrase the Gardner boyz, "You know more than you think!"

Ravi (married to Ad Sach and mother of two teens) Nam



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Author: BigMoneyJim One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19121 of 750234
Subject: Re: Good News... Date: 9/22/2000 7:12 PM
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When I was young and stupid. . .wait, I still am. Okay, when I was 21 and stupider :) , what got me to contributing to my 401(k) was a couple of graphs my company training showed me. One was a time chart (a Gantt chart, if I recall) showing two people contributing money to retirement over a certain period in their life, and the other was just a bar chart showing their worth at retirement (in this case, age 60):

-----------------------------------------------
Person 1 XXXXXXXXXXX
Person 2 XXXXXXXXXXXXXXXXXXXXX
-----------------------------------------------
Age 20...25...30...35...40...50...55...60

Person 1 put $X per month into her 401(k) from age 25 to 35 and then stopped the contributions.

Person 2 put $X (same $X, of course) per month into his 401(k) from age 35 until age 60.

Both people earned Y% per year.

Total savings at age 60:

---------------------
| XX | $ Realy impressive wad of dough
| XX | (2x - 3x what the other has)
| XX |
| XX |
| XX |
| XX |
| XX XX | $ Loser Money
| XX XX |
|Person 1 Person 2 |
---------------------

(Ridicule added and calculations ommitted because I'm lazy today)

The graphs drove the point home, and the difference really blew my mind, and even though I loved spending my money I socked away as much as allowable to the 401(k) and told myself I'd thank myself later. (Boy, was I right! And I never missed the money from my paycheck.)

It was a couple of years later before I knew enough to take it out of the T-bill fund and put it into stock funds, but those graphs started it all, and seeing my money grow has made me want to learn more about what I can do with it.

It worked for me. I suggest you pick some figures that won't scare a 17-year old (no $500/month savings), do the calculations and make a couple of pretty graphs. They speak volumes.


I also recommend pointing out that most financial/investment advisors are compensated by commision and not by how good they are at investing. Many people on TMF have suggested financial schooling, but I worry that the Wise would control the implementation, if for no other reason than they outnumber Fools. I've read that some college finance courses are run by investors, and that they offer "free" advice to their students after the course is over, and the advice leadds to the instructor making commisions. I don't know what %age of instructors are like that, of course.

Oops, I rambled away from my point. The point is to teach them to recognize when someone with financial advice may be after commisions, and that they should invest in what they know is safe. Those that actually save money will learn more about how to invest it as time goes on.

-Jim

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Author: BigMoneyJim One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19126 of 750234
Subject: Re: Good News... Date: 9/22/2000 8:33 PM
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-----------------------------------------------
Person 1 XXXXXXXXXXX
Person 2 XXXXXXXXXXXXXXXXXXXXX
-----------------------------------------------
Age 20...25...30...35...40...50...55...60


See? I'm so stupid I can't count by 5's. The chart looks even more impressive when done correctly:

----------------------------------------------------
Person 1 XXXXXXXXXXX
Person 2 XXXXXXXXXXXXXXXXXXXXXXXXXX
----------------------------------------------------
Age 20...25...30...35...40...45...50...55...60

-Jim

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Author: ranger6 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19132 of 750234
Subject: Re: Good News... Date: 9/22/2000 10:19 PM
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If the school has a computer projector, you may want to go to a website that has a financial calculator on it and show the kids what it would take to get a million dollars. I use the "Money" website and the retirement calculator to show cadets at the United States Military Academy Prep School and it really opens their eyes to the magic of compound interest.

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Author: ariechert Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19133 of 750234
Subject: Re: Good News... Date: 9/22/2000 10:27 PM
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As far as I'm concerned the most valuable thing I learned in College was about investing and compound interest. That one class made my college career worthwhile. And I majored in Animal Science! (and education and ag econ and anthropology) And not to be starting any off topics but I learned when I was in education that kids learn visually - for what its worth.
- Art

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Author: clufool Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19173 of 750234
Subject: Re: Good News... Date: 9/23/2000 6:06 PM
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My first thoughts are:

1)"The Magic of Compound Interest".
2)"What You Might Really Need for Financial Independence"
3)"The Best/Worst Places to Keep Your Money"
4)"Taking Advantage of IRA's & Employee Investment Programs"
5)"How You Can Easily Save More Than You Think (LBYM)"

I'm wondering if some of my friends here might have some additional ideas and/or examples that 150 17yr olds would appreciate


In #1 I think the students would be well served to learn the "Rule of 72". Divide the number 72 by the annualized rate of return. The answer you get tells you how many years it will take for a given lump sum of money to double. Divide the number "72" by the rate of inflation, the answer you get tells you how often you need to double your take home pay to keep up with the "Cost of Living".

Included in #3 add, "The Best/Worst places to Borrow Money" with emphasis on the hazards of "Credit Cards".

I'm sure there are others.

cf

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Author: bill2975 Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19175 of 750234
Subject: Re: Good News... Date: 9/23/2000 6:46 PM
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I'm wondering if some of my friends here might have some additional ideas and/or examples that 150 17yr olds would appreciate.

How about "The True Cost of Buying Things on Credit" with specific examples of getting way over your head in debt because of sky-high credit card interest?

Another possibility might be to show how to figure the true cost of things in terms of time you have to work to buy them (rather than just dollars).

bill2975

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Author: wallstar Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19323 of 750234
Subject: Re: Good News... Date: 9/26/2000 2:51 AM
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My first thoughts are:

1)"The Magic of Compound Interest".
2)"What You Might Really Need for Financial Independence"
3)"The Best/Worst Places to Keep Your Money"
4)"Taking Advantage of IRA's & Employee Investment Programs"
5)"How You Can Easily Save More Than You Think (LBYM)"


I think one thing a 17 yo needs to hear is "Need Versus Want", and the same goes for a lot of people at any age. It is something that is not usually taught to youngsters, and they maybe learn it by accident some day. They really need to get this basic concept under control before the other topics would do them any good.

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Author: TheBreeze Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19555 of 750234
Subject: Re: Good News... Date: 9/27/2000 7:56 PM
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Actually, I'm thrilled at the opportunity but I'm a little hesitant at my ability to teach/encourage 6 classes how to invest in less than an hour each.

My first thoughts are:...


How about adding a session, "Boneheaded Moves"? There must be plenty of bad examples and horror stories, and I bet they'd be the most entertaining. What better way to hold a teenager's attention than pointing out the foibles of grown-ups?

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Author: ariechert Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19615 of 750234
Subject: Re: Good News... Date: 9/28/2000 11:18 AM
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Actually, I'm thrilled at the opportunity but I'm a little hesitant at my ability to teach/encourage 6 classes how to invest in less than an hour each.

My first thoughts are:...

How about adding a session, "Boneheaded Moves"? There must be plenty of bad examples and horror stories, and I bet they'd be the most entertaining. What better way to hold a teenager's attention than pointing out the foibles of grown-ups?


I love the commercial on TV about the fancy watch that costs a bundle and they ask, "What would you do with a watch like this?" They say, "You'd probably tell time with it." And then they tell you how much that amount of money would have been worth when you retire if you had invested it (with them of course!). It is still a great commercial. - Art

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