What’s Your Investment I.Q.?

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Prerequisites to Investments  Prepare financial statements  Set financial goals  Establish a spending plan  Organize financial records  Establish a positive credit history  Maintain adequate insurance coverage

Financial Foundation Goals Emergency Fund Budget Financial Records Credit Record Life Disability Health Property Liability Financial PlanInsurance Insured Savings, Savings Bonds, Money Market Funds, Certificates of Deposits Life Insurance Investments Government Securities High Quality Corporate Stocks, Bonds and Mutual Funds Real Estate Aggressive Growth, Junk Bonds, Stocks and Mutual Funds Futures Contracts Collectibles Pyramid of Investment Risk Increased Risk

Emergency Fund Financial Foundation GoalsBudget Financial Plan Financial Statements Financial Records Credit Record LifeHealth Insurance Disability Property Liability

Financial Foundation Goals Emergency Fund Budget Financial Records Credit Record Life Disability Health Property Liability Financial PlanInsurance Insured Savings, Savings Bonds, Money Market Funds, Certificates of Deposits Life Insurance Investments Government Securities High Quality Corporate Stocks, Bonds and Mutual Funds Real Estate Aggressive Growth, Junk Bonds, Stocks and Mutual Funds Futures Contracts Collectibles Pyramid of Investment Risk Increased Risk

Every Little Bit Counts! Every Little Bit Counts!

Pay Yourself First at 5% interest Save this each weekIn 10 years, you will have $ 7.00$ 4,720 $14.00$ 9,440 $21.00$14,160 $28.00$18,880 $35.00$23,600

Interest Rate5 years10 years15 years20 years If you invest $1,000/year ($19.20/week) 5%$5,52412,57821,57833,065 6%$5,63713,18123,27636,786 7%$5,75113,81625,12940,995 8%$5,86714,48727,15245,762 9%$5,98515,19326,36151,160 10%$6,10515,93731,77257,257 11%$6,22816,72234,40564,203 12%$6,35317,54837,27975,052

The Rule of 72 (years to double your money) 72 = Years to double money Interest Rate

The Rule of 72 (interest rate needed based on time) 72 = Interest Rate Required Years to double Money

Investments Actively Manage Understand Risk Know Your Tax Bracket Appropriate For Your Timeline Protect Against Inflation

It’s Not What You Earn, It’s What You Keep

Rate of Return to Account for Inflation and Taxes Inflation Rate Federal, State & Local Tax Brackets

Rate of Return to Account for Inflation and Taxes ( ) RR = 4.65%

Tax Free Vs. Taxable Yield Tax Equivalent = Yield tax free rate (5%) (tax rate) (28%) 5 = 6.9% 72

TAX DEFERRAL MAGIC $2,000 Annual 5% 5$11,603.83$11,133.26$ , , , , , , , , , , , , , , , , , , , , , YearsTax DeferredTaxed InvestedInvestmentInvestmentSavings

Time is a valuable tool

EARLY INVESTOR Depositing $1,000 a year at 8% $1,083 $6,397 $15,939 Depositing nothing more but building at 8% $17,267 $35,471 $78,934 $175,656 $390,895 LATE INVESTOR Depositing nothing $0 Depositing $1,000 a year at 8% $1,083 $15,939 $51,939 $130,344 $306,000 Year 1 Year 5 Year 10 Year 11 Year 20 Year 30 Year 40 Year 50

INVESTING NOW versus INVESTING LATER AT 9% INTEREST Monthly TotalEnd Result Beginning Amount Contribution in 20 Yrs Now $ $12,000 $33,394 In 10 years $ $18,000 $29,027

Invest $1,000 a 6% for 20 years =$36,790 You have earned $16,790!!!

Investment Alternatives Mutual Funds Stocks and Bonds Treasury Certificates Real Estate Futures Collectibles

Portfolio Selection

Low Risk $ Insured Savings $ Savings Bonds $ Certificates of Deposit $ Money Market Deposit Accounts

Limited Risk  Blue chip stocks  High quality bonds  Conservative mutual funds  Government securities

Moderate Risk Growth stocks Real estate Mutual funds Medium rated corporate, municipal and zero-coupon bonds Small company stocks

High Risk * Futures, options, and derivatives * Aggressive growth, stocks and mutual funds *Junk or low rated bonds *Collectibles, precious metals

RiskReward

Investment Strategies  Invest regularly by dollar-cost averaging  Diversify your portfolio  Stay invested during down markets  Check your investments regularly  Be patient

Since 1950, if stocks were held for : 10 years -- no risk of loss 5 years -- 5% chance of loss 1 year -- 23% chance of loss Time makes a Difference!

MUTUAL FUNDS TypeObjectiveInvestments Type of Investor BalancedConserve principal,One-third bonds,Older, income- some growthtwo-third stocksoriented Income-Moderate growthCommon StocksMiddle-aged, growthwith income(blue chip)conservative GrowthHigh growth,Common stocksYounger, low income (speculative) aggressive BondIncomeBondsOlder, income- oriented

MUTUAL FUNDS TypeObjectiveInvestmentsType of Investor PreferredIncomePreferred stockOlder, income-oriented SpecializedVariousGold stocks,Depends on objective, specializedbut should only be a industry stocks,small portion of convertible bonds,investments etc. Money marketIncome and Money marketAnyone needing income safety ofinstrumentsand safety principal

Limited Risk Portfolio

Moderate Risk Portfolio

High Risk Portfolio

Where can you go for Financial Planning Information?

Who would you want to be your financial professional? 1.A chartered life underwriter 2. A certified financial planner 3.An attorney 4.An accredited financial counselor 5.A financial manager 6.An accountant 7.A real estate broker 8. A stock broker 1.A chartered life underwriter 2. A certified financial planner 3.An attorney 4.An accredited financial counselor 5.A financial manager 6.An accountant 7.A real estate broker 8. A stock broker

CRITERIA FOR SELECTING FINANCIAL ADVISORS Training Professional Improvement Registrations/licenses Types of clients and income of clients References Professional designations Length of time in business Form of compensation

Questions to Ask Your Potential Financial Professional 1.What is your professional background? 2.How long have you been doing financial planning? 3.How long have you been in the community? 4.Who can vouch for your professional reputation? 5.Will you provide references from three or more clients that you have counseled for at least two years?

More Questions for a Financial Professional… 6. Will you manage my account(s) or will it be an associate? 7. May I see examples of your plans and monitoring reports you have drawn up for other investors? 8. Are you a member of any financial planning trade organizations? 9. If you earn commissions, from whom? 10.What level of investment risk do you generally use?

How is a Financial Professional Paid? Fee Only Planner Commission Only Planner Fee and Commission Planner

Keys to Success

What’s Your Investment I.Q.?