1. Basics of Investing
Dr. Sohi

2. Dos and Don’ts Save until it hurts
Spend only on what you need and not on what you want (there will be time to splurge). Be ware of the Jones’
Prepare yourself to guard what you save.

3. To make money is hard, to help it grow is still harder
To make money is hard, to help it grow is still harder. Ignorance is dangerous. Investment industry is very complex. A great majority of so called advisors are not on your side. Learn the basics of money management Extremely important – Education of the whole family unit. Suggested reading: The Boggleheads’ Guide to Investing 2007 Amazon $43.99

4. Aim for financial independence not riches
Take a long view. Invest for the long haul
Avoid anxiety, panic
Avoid hubris, instincts, GREED (Day trading fat c. 2000)
Off the cuff, lay advice (your wife’s all knowing, cousin, Johnny)
Prepare for bad times. Emergency six months funds.

5. Prepare for bad times: Life Insurance
Term 35 year
Face value $1,000,000
Term Policy
Annual premium $700. For 35 years $700 x 35 = $24,500
Whole life: $8,000 x 35 = $ 280, 000
Alternative. Invest $7000 and add $7000 each year, 7% compounded annual return for 35 years = $ 1 million.
By age 80, whole life will pay you $1m
Invest 1m at age 35 and it will be 4m by age 80.

6. Notes Why should you care about insurance that long?
You are stuck with whole life insurance. The premiums never stop
It does have cash value which you can get by canceling the policy
You pay in “today’s money” but you get back money of many years later.
$1 today = $0.25 at 50 years from now
If you are the owner of your life insurance policy, the proceeds become part of your estate planning
Will have some life insurance through your business
How much:
Xx 0.03 = $100, 000 (minus other income). Approximately $ 3m

7. Disability Insurance
Payment ends at age 65
Money not only should meet your needs but also enough should be left to invest
Umbrella Insurance
A will
529 plans (college savings)
Custodial Accounts
Credit Scores

8. Investing the Money Financial Advisors Who needs them?
Financial Planners
Investment Advisors
Commission based
Fee based
There are 300,000 in America, 1 for 850 adults
(side note: Jamie Dimon, chairman and CEO [assets: 1.4m] of JP Morgan Chase, $2.5 trillion)

9. Investments Stocks (large, medium, small; growth, value hybrid) #2800
Bonds
US Stock Market $ 30 trillion
Mutual Funds # 9,000 Large, medium, small. $19 trillion
At least 50% households in America are invested in mutual funds.
Index Funds (largest: S&P 500) about 50% of total
Stocks vs mutual funds

10. Mutual Funds Large Mutual Fund Companies Diversification
Vanguard $5.3 Trillion funds (indexing)
Fidelity $2.1 trillion
Capital Research $1.73 trillion
T. Rowe Price $635 billion
J.P. Morgan Chase $566.8 billion (advisor sold)
Diversification
Small amount needed to buy, $2000
You are hiring one or more experienced and known managers
Money market, any size companies, domestic or foreign

11. Follow the general market
Index Mutual funds #3000 (?)
Cost is low
Follow the general market
Out perform 92% of the actively managed funds
Sources of information
Morningstar

12. Keep it simple
5-6 funds now
10-15 funds later
Diversification

15. Time Limited, expendable, uncontrollable quantity Happiness vs money
Medan Agan ~ Nothing in Excess