The Planning Center and IEEE Preparing for Retirement in Days of Uncertainty

Purpose of Today To Introduce To Inform To Educate

Introduce

Introduce Personnel The Planning Center

Introducing The Planning Center Financial Planning Firm Registered Investment Advisor NASD licensed with a Broker / Dealer Purveyor of Order and Value

What is Financial Planning? Process for meeting life’s goals Consists of six steps 1. Establishing and defining relationship 2. Gathering client data, including goals 3. Analyzing and evaluating financial status 4. Developing recommendations 5. Implementing the desired recommendations 6. Monitoring

What is a Financial Planner? A Big Question!!!

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Why Certified Financial Planner? Education Examination Experience Code of Ethics Practice Standards Re-Certified every two years

Educate How do markets work?

Educate 4 years of the DJIA 4/22/1999 – 4/22/2003

Educate

S&P 500 Index Return in % Return 1962 to % Return 1962 to % Return 1962 to % Return 1962 to % Return 1962 to % Return 1999 to % Return 1982 to %

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Large Cap Stock Market Returns (Mean) 33.4 One Standard Deviation -6.9 One Standard Deviation 53.6 Two Standard Deviations Two Standard Deviations 1999

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U.S. Inflation Returns (Mean) 7.6 One Standard Deviation -1.3 One Standard Deviation 12.1 Two Standard Deviations -5.7 Two Standard Deviations 1999

Investing in Stocks

Stock Market Performance Hypothetical value of $1 invested at year-end Assumes reinvestment of income and no transaction costs or taxes. $2, % Average Return Ending Wealth Large Company Stocks 12.6%$6,641 Small Company Stocks $0 $1 $10 $100 $1,000 $10,

Growth and Value Investing $.1 $1 $10 $100 $1,000 $10,000 $100,000 $1, % Annual Return Ending Wealth Large Growth $5, % Large Value $7499.6% $19, % Small Value Small Growth

Stock Diversification Number of Stocks in Portfolio Risk Market Risk Company Risk

Risk of Stock Market Loss over Time Periods with Gain Periods with Loss 100% 60 Fifteen-Year Periods 90% 10% 70 Five-Year Periods 73% 27% 74 One-Year Periods

Do Stock Winners Repeat? Top Ten Performing Stocks Annualized Return Annualized returns of equal-weighted portfolio of top 10 stocks by 3-year return and return in subsequent 3-year period (excluding the smallest 20% of the market). Average Returns First 3 years 130.9% -50% 0% 50% 100% 150% 200% Subsequent 3 years 6.6%

Market Downturns and Recovery Downturn 9/29-6/32 6/46-4/47 8/56-2/57 8/57-12/57 1/62-6/62 2/66-9/66 12/68-6/70 1/73-9/74 1/77-2/78 12/80-7/82 9/87-11/87 6/90-10/90 7/98-8/98 34 months -83.4% -21.0% -10.2% -15.0% -22.3% -15.6% -29.3% -42.6% -14.1% -16.9% -29.5% -14.7% -15.4% PeriodLengthAmount 7 months 5 months 6 months 8 months 19 months 21 months 14 months 20 months 3 months 5 months 2 months 11 months Recovery 7/32-1/45 5/47-10/49 3/57-7/57 1/58-7/58 7/62-4/63 10/66-3/67 7/70-3/71 10/74-6/76 3/78-7/78 8/82-10/82 12/87-5/89 11/90-2/91 9/98-11/98 PeriodLength 151 months 5 months 7 months 10 months 6 months 9 months 21 months 5 months 3 months 18 months 4 months 3 months 30 months

Principles of Investing

Power of Reinvesting Hypothetical value of $1,000 invested at year-end Annual Return $100 $1,000 $10,000 $100, $26, % Ending Wealth Stocks with Reinvestment $7, % Bonds with Reinvestment $13, % Stocks without Reinvestment $1,3451.5% Bonds without Reinvestment

Importance of Rebalancing Assumes reinvestment of income and no transaction costs or taxes. Stocks: 50% Large and 50% Small Company Stocks. Bonds: Intermediate-Term Government Bonds Stock Allocation Bond Allocation Portfolio Weightings Target Asset Mix: 50% Stocks, 50% Bonds 50% 56% 44% 60% 40% 63% 37% 78% 22% 0% 20% 40% 60% 80% 100%

Dangers of Market Timing S&P 500 Treasury Bills Hypothetical Value of $1 Invested from Year-End $2,846 $15.64 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 S&P 500 minus best 40 months $17.07

Dangers of Market Timing Hypothetical Value of $1 Invested from Year-End S&P 500 Treasury Bills $26.82 $3.79 $0 $5 $10 $15 $20 $25 $30 S&P 500 minus best 15 months $6.81

Investor B 10 $4,000 Year-End $40,000 $133,600 Power of Compounding Hypothetical Investment in Stocks Investor A 10 $2,000 Year-End Years Contributing: Annual Amount Contributed: Total Amount Invested Compounded Value at Year-End 1999 $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $20,000 $295,400

Reduction of Risk over Time Each bar shows the range of compound annual returns for each asset class over the period Year Holding Periods Small Company Stocks Large Company Stocks Government Bonds Treasury Bills -75% -50% -25% 0% 25% 50% 75% 100% 125% 150% 20-Year Holding Periods 5-Year Holding Periods Compound Average Return 11.3% 12.6%5.1% 3.8%

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Can You Stay on Track? $747 $1,091 $600 $800 $1,000 $1,200 $1, $100 $1,000 $10,000 $100, $9,413 Stocks Bonds 50/50 Portfolio $912 $24,107 $53,

OUR JOB To help you stay on track!