Investing Strategy SET GOALS FOR SAVING AND INVESTING 1©2012 National Endowment for Financial Education | Lesson 4-4: Investment Strategy.

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Investing Strategy SET GOALS FOR SAVING AND INVESTING 1©2012 National Endowment for Financial Education | Lesson 4-4: Investment Strategy

3 Steps to Build Wealth ©2012 National Endowment for Financial Education | Lesson 4-4: Investment Strategy2 1. Make enough money. 2. Have a plan to save and invest. 3. Invest.

Preview Today we will answer these questions: What are the basic guidelines for investing? Dont I need a massive amount of money to invest? When I finally have my own investments, I can just sit back and watch my assets grow in value, right? Use what you learn today to set goals for saving and investing. 3©2012 National Endowment for Financial Education | Lesson 4-4: Investment Strategy

Wealthy Habits 1. Take on an earn to invest mentality. 2. Focus on your lifestyle and financial goals. 3. PersevereDont be a quitter. 4. Let your mistakes be lessons. 5. Look for value. ©2012 National Endowment for Financial Education | Lesson 4-4: Investment Strategy4

Wealthy Habits 6. Be the one who controls your money. 7. Avoid unnecessary fees. 8. Believe in yourself. 9. Make strategic risks. 10. Be generous. ©2012 National Endowment for Financial Education | Lesson 4-4: Investment Strategy5

Build Wealth … Step #1 ©2012 National Endowment for Financial Education | Lesson 4-4: Investment Strategy6 1. Make enough money - have something left over to save for investing - cover your essential and necessary expenses - plug the spending leaks - take advantage of matching funds from employers - evaluate your situation every year

Build Wealth … Step #2 ©2012 National Endowment for Financial Education | Lesson 4-4: Investment Strategy7 2. Have a plan to save and invest. - set long-term saving and investing goals - decide your best investing options and strategies - include saving and investing in spending plan - take advantage of payroll savings plans - contribute to tax-advantage savings plans

The Oracle of Omaha Famous Investor, Warren Buffets investment philosophy: Invest in top quality, profitable companies with products you understand, good managers, and lots of cash to reinvest in the company… and hold them forever. ©2012 National Endowment for Financial Education | Lesson 4-4: Investment Strategy8

Build Wealth … Step #3 ©2012 National Endowment for Financial Education | Lesson 4-4: Investment Strategy9 3. Invest to put money to work for you. - know what you are investing in - think long term - take some risk to beat inflation - pay attention to your risk tolerance - take advantage of compound interest - diversify your investments - reinvest all earnings - dollar cost average

Dollar Cost Average Activity 4.8 Dollar Cost Averaging Is the current value of Whitneys investment more (>) or less (<) than what she paid? ©2012 National Endowment for Financial Education | Lesson 4-4: Investment Strategy10 Invest a set amount of money at regular intervals. Start receiving benefits of compounding. Stop worry about investing at high or low prices. Lower the cost per share.

7 Paths to Pure Trouble ©2012 National Endowment for Financial Education | Lesson 4-4: Investment Strategy11 Trusting others blindly Falling for fairy tales Relying on past performance Borrowing to invest Holding only one investment Flipping stocks Getting emotional about investments

Rights and Responsibilities of Investing You have the right to … Select your own or change your advisor or brokerage firm. Know if your advisor has a conflict of interest. Receive timely and accurate information. Receive the best recommendation based on your stated investing goals. Be treated ethically. Report investing problems regarding brokers or brokerage firms. Have your financial data protected. You have the responsibility to … Be informed. Read all literature, including the investment prospectus before making decisions. Verify the credentials of the person or firm who will handle your investments. Read and keep your statements. Set and communicate your investing goals. Report any unauthorized trades. Promptly report problems to regulators. Protect your financial data. Pay taxes on any earnings. Carefully consider risks, fees, and objectives before making decisions. ©2012 National Endowment for Financial Education | Lesson 4-4: Investment Strategy12

Whos Got Your Back? The Cops Securities and Exchange Commission (SEC) Financial Industry Regulatory Authority, INC (FINRA) state securities regulators The Clean-Up Crew Federal Deposit and Insurance corporation (FDIC) Securities Investor Protection Corporation (SIPC) ©2012 National Endowment for Financial Education | Lesson 4-4: Investment Strategy13

Challenge 4-B Set personal savings and investing goals: - short-term - medium-term - long-term ©2012 National Endowment for Financial Education | Lesson 4-4: Investment Strategy14