Investing for Beginners Justin Gilly RVA Financial.

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Presentation transcript:

Investing for Beginners Justin Gilly RVA Financial

Now vs Later Jim invests $100 a month ($1,200/year) at age 25 for 10 years at 10.00% compounded monthly (compounding continues after age 35) Sam invests $100 a month ($1,200) at age 35 for 30 years at 10.00% compounded monthly Who has more money at age 65?

Time Is Money

Dow Jones Industrial Average

Personal Pension Social Sec. Retirement The 3 Legged Retirement Stool

Where Can You Put Your Money? Debts (a good thing) Savings – bank holds your money CDs – bank holds your money, time specified Money Market – short term Bonds – “loan”, lower risk (usually)

Where Can You Put your Money? Securities Stocks – “ownership”, risk varies Mutual Funds – “pool”, risk varies ETF’s – “index”, risk varies

What Programs are Available for Retirement Savings? What are they, how do they work, and what are the underlying investments Traditional IRA Roth IRA 403 (b) 401 (k)

IRA After-Tax Investment up to $5,000/year Account grows tax deferred Taxes paid once distributions are taken 10% IRS penalty assessed before age 59 1/2 Must start distributions at age 70 1/2 Equal distributions under Rule 72(t) Some withdrawals allowed

Roth IRA Tax-free earnings and distributions after five years and age 59½ Maximum annual contribution of up to $5,000 Contributions permitted after age 70½ Distributions not required after age 70½ Penalty-free withdrawals prior to age 59½ under certain circumstances

403(b) Schools, colleges, state agencies Immediate vesting 2009 max contribution $15500 Portable

401(k) Employer sponsored Matching/vesting schedules 2008 max contribution $15500 Portable?

How To Manage Risk Consult an investment professional Match your investments with your time frame Pick funds managed by experienced professionals Invest regularly - in good times and bad Diversify!

How Do Taxes Affect Investing? Tax Deductible Investing options Tax Deferred Investing options Marginal Tax Brackets

How To Get Started. Talk to an advisor Start doing research Tips to help get started Begin planning 401(k) - go to employer IRA - Bank/ mutual funds/ETFs – do own investments T. Rowe Price, Vanguard, Fidelity, etc – use a financial advisor

Summary Points Start Now Where to Invest Retirement Diversify Retirement Taxes How to Get Started Advisor or Not Cost Wrap Up

Questions?