Facilitator's Guide - PBS

Activity Three – Investing in Retirement
Materials Needed: computers with internet access, magazines such as “Kiplinger’s,”“Money,”“SmartMoney,” and books on investing basics.
The facilitator should begin this activity by asking the following questions:
a If asked to create a retirement plan for yourself, do you feel confident that you could do this successfully?
b What is the difference between a traditional pension (“defined benefit plan”) and a 401k plan?
c If you have no employer-provided program for retirement, what other options are available?
If not, why not?
The facilitator should then state the following to participants:
Many employers provide retirement savings programs, or pension plans for employees.
However, people who own their own business, or who work as independent contractors,
must provide for themselves. In order to provide for retirement, people may contribute
to a 401k Plan or an IRA or both. For either option, they often choose mutual funds in
which to invest their money. In order to make wise choices, people must be able to
understand what a mutual fund is and how to choose mutual fund(s) that best suit
their objectives. Good places to find such information are magazines, books and the
internet.
Directions for group: Your task will be to research and evaluate mutual funds from
among the following categories: international stocks, domestic stocks, bonds, and a
blend of stocks and bonds. Select FIVE funds (stocks, bonds or a combination) that you
find appealing from among any of these categories. For each one that you have chosen,
obtain the following information:
• Load (cost to buy or sell)
• Fees
• Risk rating
• Return rating
• One-year rate of return
• Five-year rate of return
• Ten-year rate of return
Then compare the rates of return and fees with those of an index fund, such as the S & P 500 Index. Based on your research, prepare a graphic
representation of the data that you have obtained. Be prepared to defend your mutual fund choices.
The facilitator should conclude this activity with the following questions:
a From the research you have completed, what conclusions would you draw
about investing in mutual funds for retirement?
b What have you learned about planning for retirement?
EXTENSION ACTIVITIES:
a Direct participants to research at least three occupations of interest to them and record the likely salary range, geographic areas of
demand, training and education requirements. They will need to use the internet and/or the library to find the necessary information.
b The Rule of 72 - The facilitator should tell the participants:
“Mathematicians have discovered that by using the number 72 as the numerator and whatever number is the rate of return on your
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