Transcript WM Topic 1 - Tobe-HSB

Wealth Management
Mrs. Tobe
Topic 1:
Deciding What You Want in Life
Topic 1:
Deciding What You Want in Life
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Goal – the purpose toward which an
endeavor is directed; an objective
Short-term goals – expect
accomplishment over a short period of
time; relates to the goal’s overall
timeline
 Long-term goals – typically set with a
longer timeline than short-term goals;
five years on average
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Benefits – helps to keep you on track
and in line to meet whatever goal you
have set
Topic 1:
Deciding What You Want in Life
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Types of goals
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Career, community service, creative,
education, family, financial, physical,
recreation
Steps for setting goals
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Be precise, set priorities, write goals
down, keep operational goals small, set
performance goals (not outcome goals),
set realistic goals
Topic 1:
Deciding What You Want in Life
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What’s involved in setting a goal?
What are the characteristics of
effective goals?
What’s the difference between shortterm and long-term goals?
In what aspects of their lives can
they use goal setting?
What are S.M.A.R.T. goals?
Topic 1:
Deciding What You Want in Life
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Resources – Something that can be used for support
or help. For example, the local library is a resource for
books, magazines, and other reference materials.
Scarcity – Ever-present situation in all markets
whereby either fewer goods are available than the
demand for them, or only too little money is available
to their potential buyers for making the purchase. This
universal phenomenon leads to the definition of
economics as the "science of allocation of scarce
resources.” Individuals, families, businesses, and
government all face this basic economic problem.
Topic 1:
Deciding What You Want in Life
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Distribution – Payment of principal, interest, or dividend by the
issuer of a security to the security holders, on a regular (typically
monthly or quarterly) basis. For example, you own stock in Apple
and each month you receive a dividend check for amount of the
company you own.
Wealth management – Wealth Management is classified as an
advanced type of financial planning that provides individuals and
even families with private banking, estate planning, asset
management, legal service resources, trust management,
investment management, taxation advice, and portfolio
management
Allocation – authorization to incur expense or obligation up to a
specified amount, for a specific purpose, and within a specific
period. For example, the school district will allocate funds to the
music department for the purchase of new uniforms until their
annual fundraiser is completed.
Topic 1:
Deciding What You Want in Life
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Explain how scarcity relates to forms of
distribution
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Supply of items are limited. Demand for items
makes the item scarce.
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prices, majority rule, contests, force, first come/first
served, lottery, sharing, personal characteristics
Topic 1:
Deciding What You Want in Life
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Describe the need to compare costs
of alternative financial decisions with
their benefits.
Weight options to see what is the best
financially
 Look at benefit and see if worth the cost
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Topic 1:
Deciding What You Want in Life
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Discuss how cost/benefit comparisons
can result in effective allocation
systems.
Individuals and business will look at the
cost of certain benefits to see how
effective it may be
 Look into many different options
 Compare pros, cons, benefits, and costs
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Topic 1:
Deciding What You Want in Life
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Property rights – the legal right to own property; extensive property
rights of private individuals in most goods is a basic element of the
capitalist system. In our market economy, we have the right to own, use,
and dispose of property.
Financial institution – institution that collects funds from the public to
place in financial assets such as stocks, bonds, money market
instruments, bank deposits, or loans. Depository institutions (banks,
savings and loans, savings banks, credit unions) pay interest on deposits
and invest the deposit money mostly in loans. Nondepository institutions
(insurance companies, pension plans) collect money by selling insurance
policies or receiving employer contributions and pay it out for legitimate
claims or for retirement benefits.
Nonprofit organization – association that is allowed to exist without
paying income taxes. Most nonprofit organizations are in a socially
desirable business (hospital, educational institution, charity) and those
qualified by the Internal Revenue Service may receive contributions that
are tax deductible to the donor.
Topic 1:
Deciding What You Want in Life
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Identify examples of institutions
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Institutions evolve in market economies to help
individuals and groups accomplish their goals.
Banks, labor unions, corporations, legal
systems, and not-for-profit organizations are
examples of important institutions.
A different kind of institution, clearly defined
and enforced property rights, is essential to a
market economy.
Topic 1:
Deciding What You Want in Life
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Explain the relationship of property
rights to decision-making.
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Property rights help insure that people bear the
costs and reap the benefits of their decisions.
Property rights and contract enforcement
encourage investment by assuring investors
that they will reap the rewards of deferring
consumption and assuming risk if these
investments perform well.
Topic 1:
Deciding What You Want in Life
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Discuss how institutions help to reduce
costs for buyers and sellers.
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Banks match savers with borrowers; and
investment banks match entrepreneurs who
organize new firms with investors who provide
the needed funds.
Many institutions work to promote the goals of
certain interest groups. Labor union, for
example, increase the negotiating power of
workers in their dealings with employers.