Mod 14 Part 1

Module 14 Part 1 - Psych 126 - Tracking Your Financial Progress

Five Bookmarks:

"All people smile
in the same language."

(You can find all the course learning objectives by clicking the bookmark called Expected Outcomes on the Psy-126 Internet Syllabus.)

2.	- page 449 - Identify your tolerance for risk by completing Self-Assessment 15-1.
3.	Write down and then practice your briefing on choosing stocks, using the Value Line Method and the Dogs of the Dow Theory, on four companies within the Dow that show "current doggishness." (Use only key words or phrases, and numbers that will jog your memory.)

Class Activities:

1st	Review:
2nd	Accomplish Learning Objective #2.
3rd	Accomplish Learning Objective #3.

1st Review:

Review

Are there questions or unfinished business from the previous Chapter 13 that deal with "Getting Ahead in Your Career" or with the present Chapter 15 "Managing Your Personal Finances?"

2nd Accomplish Learning Objective #2.

2.	- page 449 - Identify your tolerance for risk by completing Self-Assessment 15-1.

Your Money Personality

Below you'll find a two-part quiz that addresses your willingness to take risks and your desire to be involved with the investment decision-making process. Take it and perhpaps you'll find out something you didn't know about yourself.

Risk versus Safety (Mark your preference in the green squares.)

1.	If I found a secure job which I thoroughly enjoyed, I would...
	a. probably stay in it indefinitely.
	b. stay unless a better opportunity came along.
	c. be on the lookout for a better opportunity or investigate ways to start a business of my own.

2.	I would become involved in a new business...
	a. only as a customer.
	b. as an employee if I've checked it out and it seems as if it's a good opportunity.
	c. as an investor if there's the chance of a big payoff.
3.	Buying a car I prefer...
	a. an economy model with good performance ratings and an extended warranty.
	b. an exciting model, still unrated, with a standard warranty.
	c. a sleek and prestigious vintage car that would increase in value, but may be costly to maintain.
4.	Visiting a casino, I...
	a. generally feel uncomfortable.
	b. enjoy some games, but budget how much I can afford to lose and stop after that.
	c. get caught up in the games and sometimes have big losses.
5.	I've discovered that I'm most nervous around someone who...
	a. spends frivolously and/or takes big risks with money.
	b. misses opportunities because of risk or fear.
	c. never takes a chance in hopes of a big payoff.

High Involvement versus Lack of Involvement

1.	At any given time I know...
	a. my total assets and liabilities, down to the last $200.
	b. more or less what my assets and liabilities are.
	c. which bills I have to pay form my latest paycheck.
2.	If the interest on my credit card were raised, I would...
	a. shop until I found a lower rate.
	b. look into a few other cards.
	c. go on paying as before because it is convenient.
3.	My personal checkbook is...
	a. always balanced.
	b. balanced every few checks of every week.
	c. only balanced when I receive a statement and sometimes not even then.
4.	If suddenly I had a much larger income, I would
	a. manage all of it myself and enjoy doing it.
	b. work with my partner as well as with financial experts.
	c. hire financial experts as well as someone to manage my day-to-day expense money.
5.	I'd prefer an investment which...
	a. would make money for me if I kept an eye on it constantly.
	b. I only need to evaluate every few months.
	c. I never have to worry about.

Based upon the interpretation of results, how did you score with respect to Risk versus Safety?
Based upon the interpretation of results, how did you score with respect to High Involvement versus Lack of Involvement?
Does the advice from Kathleen Gurney, chief executive of Financial Psychology Corporation seem applicable to you?

3rd Accomplish Learning Objective #3.

3.	Write down, and then practice your briefing on choosing stocks, using the Value Line Method and the Dogs of the Dow Theory, on four companies within the Dow that show "current doggishness." (Use only key words or phrases, and numbers that will jog your memory.)

An Approach to Your Portfolio

The Value Line Method Combined With "Dogs of the Dow Theory" for Selecting Stocks

Introduction

Body (main points)

1.

2.

3.

Summary and Conclusion

Class Activities

Items covered in this class session or listed as homework:

Undone Begun Completed Mentioned or
Discussed

Review/Preview
Learning Objectives

Class Activities

1st
2nd
3rd

Summary

Homework

Instructor Comments:

Student Comments:

Homework:

1.	- page 439 - Create an annual net worth statement to compare the monetary differences between things owned and things owed.

Net Worth Statement (Balance Sheet)

A balance sheet is a list of the dollar value of each category of assets (things you own), followed by a list of the dollar value of liabilities (amounts owed to others).

The sum of the assets less the sum of the liabilities is either your positive or negative net worth.

(Students frequently begin life with a negative net worth.)

Fill in the category values to the right to determine your net worth, and then track its progress once each month.

Balance Sheet of _______________ (your name)

Date ___________

Assets

Liabilities

CURRENT

1.	Cash	______
2.	Checking	______
3.	Savings	______
4.	Life insurance cash value	______
5.	Stocks/bonds	______
6.	Mutual Funds	______
7.	CDs, other	______
	Total #1	______

CURRENT

1.	Unpaid bills	_______
2.	Credit cards	_______
3.	Loans	_______
4.	Mortgage	_______
5.	Other	_______
6.	Total #5	_______

Can your current assets pay off your current liabilities?

Yes
No

What are the advantages of creating and using a balance sheet?

REAL ESTATE INVESTMENTS

LONG TERM LIABILITIES

1.	Residence	______
2.	Rental Prop.	______
3.	Total #2	______

1.	Mortgage Loan	______
2.	Installment Loans	______
3.	Total #6	______

Do you think the size of your balance sheet follows a lifecycle? If so, when would one's net worth be negative, positive (but low), and high?

MARKET VALUE OF PERSONAL ASSETS

1.	Cars	______
2.	Jewelry	______
3.	Furniture	______
4.	Other	______
5.	Total #3	______

TOTAL LIABILITIES

#5 +6 = ____________

What actions would you take if you could not ultimately generate a positive net worth?

RETIREMENT FUNDS

1.	IRA
2.	401K Plan
3.	Vested Pension
4.	Annuities
5.	Total #4

TOTAL ASSETS
#1+2+3+4 = __________

NET WORTH = Total Assets minus Total Liabilities = ___________

"All people smile in the same language."