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
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Resources
Materials
Organizations
Agencies
Glossary of terms
Contact us – and Thanks!
Justin Southern or James Rutledge
West Virginia State Auditor’s Office
State Capitol Building 1, Room W100
Charleston, WV 25305
304-558-2251 or 877-982-9148
justin.southern@wvsao.gov
James.rutledge@wvsao.gov
www.wvsao.gov