Lesson Notes By Weeks and Term - Senior Secondary 3
Wealth creation
Wealth creation
Term: 1st Term
Week: 4
Class: Senior Secondary School 3
Age: 17 years
Duration: 40 minutes of 2 periods each
Date:
Subject: Home management
Topic:- Wealth creation
SPECIFIC OBJECTIVES: At the end of the lesson, pupils should be able to
1 Explain the meaning of wealth creation
INSTRUCTIONAL MATERIALS: Videos, loud speaker, textbook, pictures
INSTRUCTIONAL PROCEDURES
PERIOD 1-2
|
PRESENTATION |
TEACHER’S ACTIVITY |
STUDENT’S ACTIVITY |
|
STEP 1 INTRODUCTION |
The teacher reviews the previous lesson on money management |
Students pay attention |
|
STEP 2 EXPLANATION |
She explains the meaning and types of wealth creation |
Students pay attention and participates |
|
STEP 3 DEMONSTRATION |
She highlights ways of creating wealth and distinguishes between investment and insurance with examples |
Students pay attention and participate |
|
STEP 4 NOTE TAKING |
The teacher writes a summarized note on the board |
The students copy the note in their books |
NOTE
WEALTH CREATION
Wealth creation is the process of accumulation of assets, investments, and resources over a period of time. It combines key aspects like strategic planning, risk-taking, and long-term investment perspective for meeting the financial goals of wealth creation. The power of compounding at the same time starting investments at an earlier stage of one’s career is instrumental in wealth creation over the long term.
Wealth creation requires identifying and analysing profitable investment opportunities and investing in productive assets aligning them with financial goals at different stages of life.
Importance of wealth creation
Wealth creation is important from many viewpoints like securing the future through effective retirement planning, ensuring regular income to meet the needs of a person and their family, and more. The importance of wealth creation is highlighted hereunder.
The primary importance of wealth creation is to secure the financial future of the person and their family. A person can create significant assets and income opportunities as part of wealth creation to ensure financial stability even in case of any unfortunate event. Such wealth can be used to meet unexpected financial emergencies or expenses.
Systematic wealth creation allows a person to meet their goals in a timely manner. In order to meet financial goals, mere savings is not enough. Therefore, it is important to invest in diverse investment options that are suitable for different time frames ranging from short-term to long-term investment horizons and align them with respective financial goals.
Wealth creation contributes directly to the growth of the economy in the form of job creation, increased consumer spending, increased profits for businesses, and more. This leads to a collective environment of increasing investment opportunities for all categories of investors.
Wealth creation allows investors to build assets and resources that they can pass on to future generations as part of their legacy or inheritance. This inheritance also helps in safeguarding the financial future of the following generations
TYPES OF WEALTH CREATION
Value and dividend stocks produce the best long-term performance results of any stock selection methods.
There are many different asset classes that are considered alternative investments. Some examples are real estate, fuel sources and private equity. Alternative investments may reduce the overall volatility of an investment portfolio and provide greater investment returns and diversification.
The investments in this category can take many forms. For example, a special situation could be a very undervalued real estate investment. Some stock analysts consider special situations to involve corporate event-driven actions such as mergers, spinoffs, liquidations, acquisitions, situations involving activist investors and turnarounds. In almost all cases, stock analysts believe the target company or investment must be undervalued to be a good special situation opportunity. In the case of undervaluation, the more undervalued the better, as this provides a margin of safety. As with other investments, we calculate our estimate of the special situation’s intrinsic value where possible.
We conceive of a visionary idea as a business idea or model that is new and transforming. By transforming, we mean that it is an idea or model that has not been used before, but that will have a significant influence on the way the world does things in the future. Examples of visionary business ideas from the recent past, which are playing a significant role in today’s world, are Starbucks and Uber. Visionary ideas that are moving to the forefront at the current time are self-driving cars and artificial intelligence, to name just a couple. These are the ideas that many entrepreneurs strive for and have been known to deliver both industry-wide disruption and success.
Studies have shown that international stocks can provide good diversification for a stock portfolio. Buying individual international stocks, though, is not for everyone. Successful investing in international stocks requires knowledge of different countries and their languages, customs and accounting standards. There are also major differences in international stock markets, currency issues and the general reliability of international companies. For these reasons, it may be best for most people to invest in the international markets via well-run and knowledgeable mutual funds.
Real estate is one of the main sources of wealth creation. There are many types of real estate one can invest in -- examples include single family homes, multifamily residential, self-storage, office buildings and industrial. There are many good real estate investment clubs around the country that help people invest in real estate. They provide education, networking and resources, which can help you with entrepreneurial and business-related efforts.
Fixed income investments such as corporate bonds, government and federal agency securities and cash have only limited wealth building properties. They can provide reliable income, and many financial planners recommend that one holds a portion of their assets in these types of fixed income -- particularly as they get older and their investment time horizon gets shorter. Many financial planners also recommend holding a certain portion of one’s assets in cash for liquidity, emergencies, spending and other reasons.
In my years of experience, I have seen that starting one’s own business is one of the best ways to build wealth. The business must be successful, of course. Unfortunately, statistics show that most businesses either are not successful or, perhaps worse, are only marginally successful, leading one to a subpar means of making a living. But starting a business can be one of the most interesting challenges that a person can pursue. There are many resources for entrepreneurs who want to start and grow a business.
Having multiple sources of income and wealth provides increased opportunity and diversification. Some people have two or more jobs, some have two or more businesses, some have a job and a business -- a good strategy, in my opinion. Having two or more sources of income and wealth increases the likelihood that your total income and wealth will be greater over time. A word of caution though -- in pursuing multiple sources of income and wealth building strategies, be careful not to overextend yourself. This is especially true for business owners and entrepreneurs who have multiple endeavors operating at once.
WAYS OF CREATING WEALTH
For a more secure future, you could consider trying out these 7 tips to move towards life-long financial independence:
Monitoring your cash flow, and controlling your spending can work wonders with what your money can do for you. Maintain a family budget and review it every month, and create a net-worth statement.
Your greatest asset is your potential to earn. You need that to continue at any cost. Have life insurance in case of your untimely demise. But that is not enough. You need to have critical illness coverage as well for an income if you cannot work.
Create a properly diversified portfolio of various asset classes that preferably includes passive income generation.
Planning for expected expenses, like a child's education or retirement, is not enough. You need to also plan for unexpected expenses like a car breakdown, and house repairs. Build up an emergency fund to the value of three months' income.
Put aside at least 10% of your monthly income in long-term investments, and adjust your lifestyle to the remaining 90% that is left.
Create a properly diversified portfolio of various asset classes that preferably includes passive income generation. Dividend-yielding stocks, income from rent, and bonds are good investment vehicles. Place significant investments in annuities as well.
Deal head-on with inefficient debts like credit card dues. Relying heavily on credit cards for making purchases results in having to fork out huge amounts in monthly interest. You could put that money into long-term investments instead of lining the pockets of credit card companies.
Living below your means is not something to be ashamed of. Many millionaires do it. If you want something, you have to give something. Cut down on eating out, online shopping or go on a vacation every two years instead of every year. You won't believe how much spare money you will be left with that you can save.
Creating wealth that lasts even after you have passed on would add a final touch. With the help of your net-worth statement, you can create a will so that the wealth you have accumulated during your lifetime will go to the persons of your choice
DIFFERENCES BETWEEN INSURANCE AND INVESTMENTS
Insurance aims to provide protection to a person or family from various forms of financial loss that can occur at any time, either in the form of loss of life, damage to property, or health problems.
Investment aims to get a return of all money or assets, which have been given to third parties, along with the profits at an agreed time in the future.
Insurance provides protection or protection that can be enjoyed during the coverage period. In life insurance, you can get the Sum Insured as much as agreed between you (the Insured) and the Insurance Company (the Insurer). As for health insurance, you can get protection/reimbursement of treatment costs (hospitalization).
Investments provide returns on assets or money invested and returns on investments based on conditions that affect the investment, for example: when investing in foreign currency, gold, or stocks, the value of money or assets will be affected by the price of the investment.
You can use the results of the Insurance only when the insured risk factor occurs. Meanwhile, you can get the results from your investment at any time, according to your considerations or needs.
EVALUATION: 1. Define wealth creation
CLASSWORK: As in evaluation
CONCLUSION: The teacher commends the students positively