Economics Unit 5Personal Finance
Who wants to be a millionare??
How?
•Play the Texas Lotto?
Question 1:
•Are most millionares college graduates?
• Yes•4/5 millionaires are college graduates•18% have masters•8% law degrees•6% medical degrees•6% Ph.D.
Question 2:
•Over/under 40 hours a week worked by millionaires?
•Over.•About 70% of millionaires work between 45-55 hours a week.
Question 3:
•True/False:
Over half of millionaires received money from a trust fund (parents) or inherited most of their money.
•False.•Only 19% received any income/wealth of any kind from a trust fund•Less than 10% inherited more than 1/10th of their wealth.
Question 4:
•Do more millionaires have American Express Gold cards or Sears cards?
•Sears card.•28% have credit card•43% have Sears card
Question 5:
•Do more millionaires have Cadillacs or Fords?
• Ford.• Ford is preferred by 10% of millionaires•Cadillac is preferred by 8% of
millionaires• Lincoln is preferred by 7% of millionaires•Only 23% of millionaires drive a current
year (new) car
Question 6:
•Do most millionaires work in big Fortune 500 Companies?
•No.•About 3/4 of millionaires are self-employed•Consider themselves to be entrepreneurs
Question 7:
•Do many poor people become millionaires by winning the lottery?
•No.• Few people get rich the easy way.• The chances of winning the lottery
are 1 in 12 million• In contrast, you have a 1 in 1.9 million
change of being struck by lightling
Question 8:
•Over/under 50% more income college graduates earn over their high school graduate counterparts?
•Over.•College graduates earn 66% more than high school grads•People with professional degrees earn 150% more than the average high school graduate
Question 9:
•Do day traders usually beat the stock market and become millionaires?
•No.•Recent studies suggest 80% of day traders lose money.
Question 10:
•If you want to be a millionaire, should you avoid the risky stock market?
•No.• Almost 95% of millionaires own stocks.• Since 1926, stocks have increased at
11% at a compounded, annual rate of return.• 11% exceeds any other type of
investment.• Investing in stocks does involve risk.
Question 11:•At age 18 you decide not to drink one coke a day and save $1.50 each day. You invest this $1.50 at 8% annual interest until you are 67. •At age 67, would your savings from not drinking one coke each day be over/under a quarter of a million dollars?
•Over.• It would be almost $300,000 •Because of the power of compound interest, small savings can make a big difference.• It pays to save and live below your means.
Question 12:
• If you save $2,000 a year from age 22 to age 65 at 8% interest, your savings will be about…
How much?
•Over $700,000•Regular saving will make you a millionaire even if your income is modest.
Question 13:
•True/False:
•Single people are more often millionaires than married people.
•False.•Most millionaires are married and stay married.
Improving your financial life:
• Get a good ecucation.• Work long, hard,
and smart.• Learn money-
management skills.• Live below your
means.
• Buy a home.• Save early and
often.• Invest in mutual
funds/common stucks for the long term• Gather information
before purchasing
Net Worth• Assets: What you own and can exchange for value.
This includes any savings, houses, cars, personal possessions, etc.• Liabilities: Money you owe others. This could include
mortgage, car loans, credit card, debt, student loans, etc.• Assets – Liabilities = Net Worth• People can have a large income and still have a low
net worth if they have many liabilities.
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