Long Term Investing 401K’s, IRA’s, Mutual Funds.

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Presentation transcript:

Long Term Investing 401K’s, IRA’s, Mutual Funds

Types of Investments (4-Asset Classes) Stocks Real Estate Bonds Cash Accounts Checking account, CD’s, money markets Average return per year 1926 - 2000 5.0% 9.8% 3.5% 3.0% $10,000 invested 30 years ago

Holding Period When do you need your money back? Time horizon determines which asset class you should invest in The longer the holding period----the more risk you should take! Stocks = long term investment (5-years or longer) Bonds = medium term investment ( 1-3 years) Bank CD’s = short term investment (30 days to 2 years)

Process of picking sectors to invest in Asset Allocation Process of picking sectors to invest in I think I’m brilliant very high risk Cash Account Bonds Stocks no risk med. risk high risk $10,000 invested for 30 yrs $28,000 $43,000 $165,000 ???

Mutual Funds professionally managed collective investment vehicle that pools money from investors to purchase securities Managers can buy stocks, bonds, commodities, etc…. Money Pooled in a specific fund

How to buy stocks, mutual funds? You first need to open a brokerage account Banks Checking & Savings account Brokerage Account Brokerage Firm Specialize in accounts for stocks, bonds, mutual funds

Pick your own mutual fund Reading:

Hidden Fees on Mutual Funds Funds have yearly expense charges You should not pay more than .75% per year Many funds also have fees to buy the fund Often these “loads” are hidden 401-K IRA Roth IRA 529 plan Etc…..

Quantitative Easing Bonds vs. Stocks?? I think I’m brilliant Cash very high risk Cash Account Bonds Stocks no risk med. risk high risk $10,000 invested for 30 yrs $28,000 $43,000 $165,000 ???

Retirement Gamble PBS Video 2013 PBS special on retirement investment dangers…. Retirement accounts: 401-K IRA Roth IRA http://johncbogle.com/wordpress/ Video Link

The Power of Compounding