# Economics and Personal Finance/Retirement and Stock Market
## Retirement Plan
### Social Security

Some retirements may come from the government (social security):
* Designed as a safety net to provide income for older people when they can no longer work
* It's automatically deducted from your paycheck
* Determined by the amount you've contributed and your age when claiming benefits
* Include disability and survivor benefits
* Payments are likely to be less than what your income was, so you must supplement through savings, investments and continued employment.
* Retirement age is 67. You may start collecting benefits if you retire early at 62, but your checks will be smaller.
You contribute 6.2% of your income with your employer matching that contribution to 12.4% total. If you're self-employed, you contribute all of that 12.4%.

### Retirement Options provided by you/your employer

* IRA (Individual Retirement Account): Contributions are tax-deferred (meaning you don't pay taxes until you withdraw).
* TSA (Tax-Sheltered Annuity): For employees of public schools and non-profits (ex. 403b).
* Keoh Plan: For self-employed small business owners.
* Employee retirement plan: Contributions deducted from your paycheck (ex. 401K).
* Pension: Paid for entirely by the employer.

### Considerations for choosing investment options

* Consider the RISK (investment risk, inflation risk, industry risk, political risk)
* Consider REWARD (benefit/return gained)
* Consider CONVENIENCE (sense of relative ease and accessibility)
* Consider LIQUIDITY (how quickly a financial instrument can be converted to cash)

#### Savings Account

* HIGH liquidity
* LOW risk
* LOW return

#### Stocks

* HIGH liquidity
* HIGH risk
* HIGH return

#### Real Estate

* LOW liquidity
* HIGH risk
* HIGH return
| Retirement | Problems |
| Govt. assistance | SS no longer a guarantee |
| Pension from employer | Fewer companies are offering pensions |
| Nest Egg | |

## Stock Market

When you buy a stock, you buy partial ownership in a corporation. If a company is expected to do well, demand for its shares rises and prices rise. If a company's future looks bad, demand decreases and prices fall. Licensed to buy/sell stocks, brokers provide investment advice and they collect a commission on each purchase/sale. Profiting from stocks go two ways:
* Dividends: Payments made by corporations to stockholders.
* Capital Gains: Selling a stock for more than its original purchase price.
[SELLING PRICE - PURCHASE PRICE = CAPITAL GAIN/LOSS]
You can determine whether the stock market is performing or not based on a few tools: DOW (Dow Jones Industrial Average) lists the 30 leading industrial stocks, S and P 500 (Standard and Poor's 500 composite indexes) covers market activity for 500 companies and is more accurate than DOW because it evaluates a greater variety of stock and NASDAQ (National Association of Security Dealers Automated Quotations) monitors fast-moving tech companies; speculative stocks, show dramatic ups and downs.

### "Ups and Downs" of a stock market

* Bull Market - The market is doing well and investors are optimistic and people are purchasing stocks.
* Bear Market - The market is doing poorly and people aren't purchasing stocks.

### Stock Exchanges
#### New York Stock Exchange

The NYSE is the oldest and nationally-recognized "blue chip" of companies (began in 1792). The average stock price is $23. Although the benefits, the NYSE has strict requirements.

#### NASDAQ

The NASDAQ mostly never handle tech stocks; trades occur electronically; more volatile because companies are young and new; stock price: $1.

### Stock Market Risks

* Interest rate risk: If interest rates rise, stock raise will fall.
* Inflation risk: Inflation = stock value will fall.
* Business risk: Problems with the business (scandal, poor management, etc.) = stock value will fall.
* Liquidity risk: You're unable to find a buyer when you're ready to sell.
* Supply and demand risk: If fewer people demand the product = stock market will fall.