West Virginia State Auditor
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Transcript of West Virginia State Auditor
West Virginia State Auditor
Civics Education Seen Through a 21st Century Lens
July 27, 2006
Presented by:
Justin Southern, Communications Director
James Rutledge, Investor Education Specialist
Securities Regulation
• 1844 – Joint Stock Companies Act (UK) – First law to require companies to offer a prospectus
• 1911 – Kansas passed “Blue Sky” law• 1929 – Individual states adopt “Uniform
Securities Act”• 1931 – WV Legislature passes the act
– Chapter 32 of W.V.S.C.– West Virginia State Auditor as
Commissioner of Securities, ex-officio– Predates creation of SEC (1934)
Why teach investor education?• According to a June 2006 survey by the
Center for Retirement Studies at Boston College:– Only 20% of Americans are eligible for a
pension (80% must fend for themselves)– 43% of Americans will not have enough
saved to maintain their standard of living in retirement
– 25% have never enrolled in their company offered 401(k)
– 45% cash out of their 401(k) when they change jobs
West Virginia Securities Commission
presents a first hand look at:
The Basics of Saving and Investing:
Investor Education 2020
A product of the
Investor Protection Trust
www.investorprotection.org
About IPT
• Created in 1993• Provides “independent and objective investor
education”• More than 40,000 high school teachers use IPT
publications• Over 350 teacher trainings completed• 3rd teaching tool offered
– #2 “FL2010” is 2nd most accessed publication from the Jump$tart Coalition’s clearinghouse website
– Focuses solely on Investor Education
• Funded by securities enforcement actions• All trustees are state securities regulators
Unit 1 – Getting Started
• Defining “Investor Education”
• Why people save and invest
• How to think about making financial decisions
• Key concepts of saving and investing
• Unit 1 test / answer key
Let’s tour Unit 1
Teaching Standards / Key Terms
•Compound Interest
•Goals
•Interest Rate
•Opportunity Cost
•Risk
Unit Objectives
• Discuss why people save and invest
• Learn how to think about financial decisions
• Understand the key concepts of saving and investing (including the “time value of money”)
Each unit contains multiple handouts…
Each lesson within the unit contains an outline
Unit 1 – Lesson 1
• Why people save and invest– Preparing for a career, often by going
to college– Saving for a major purchase or
expense– Building up a “rainy day” fund– Developing a personal
finance/investment plan– Starting a saving and investing
program
Unit 1 – Lesson 2
• How to think about making financial decisions– 1. Problem (Kathy wants to buy a car)– 2. Gather information (Internet, etc.)– 3. Consider Alternatives (bus, lease)– 4. Make a decision (buys used but
reliable two year old car)– 5. Modify plans if needed (moves to
city – sells car)
Lesson covers macro/ micro economic terms• Needs
• Wants
• Choices
• Costs
• Benefits
• Trade-Offs
• Opportunity Costs
Unit 1 – Lesson 3
• Key Concepts of Saving and Investing– 1. Pay yourself first– 2. Set goals that inspire success
(short, medium and long term)– 3. Don’t take unnecessary risks– 4. Put time to work for you– 5. Diversify!
Pyramid of Risk Chart
Paying Attention?
Can you place the following?
Futures
Real Estate
High Quality Stocks
Aggressive Growth Bonds
High Quality Corporate Bonds
Government Bonds
Paying Attention?
Can you place the following?
Futures
Real Estate
High Quality Stocks
Aggressive Growth Bonds
High Quality Corporate Bonds
Government Bonds
Quiz / Answer Key
Time Value of Money
•Investor A starts investing $40 a week at 25, quits investing at 35 years old.•Investor B starts investing $40 a week at 35, quits investing at 65 years old.
•Investor A total investment $20,000•Investor B total investment $62,000
•Who ends up with the most money?
Answer…
Investor A: Investor B:
Time Value of Money Quiz
Magic of Compounding!
Unit 2 – Introduction to Financial Markets• Understanding risk and reward
• How financial markets work
• Savings, stocks, bonds, mutual funds and other investments
• Regulation of financial markets
• Unit 2 test / answer key
Unit 3 – Making a Financial / Investment Plan• Introduction to financial planning /
investing concepts
• Framing a plan to meet students’ financial goals
• Selecting financial professionals
• Unit 3 test / answer key
Unit 4 – Investment Fraud
• Introduction to investment scams
• How telemarketing fraud works: Inside a “Boiler Room”
• Teach your students to become “Victim Proof”: Self-defense tips against fraud
• How regulators protect investors
• Unit 4 test / answer key
Appendix
• Resources
• Materials
• Organizations
• Agencies
• Glossary of terms
Contact us – and Thanks!
Justin Southern or James RutledgeWest Virginia State Auditor’s OfficeState Capitol Building 1, Room W100Charleston, WV 25305304-558-2251 or [email protected]@wvsao.govwww.wvsao.gov