1. Course of Study for Beginning Investors Class 1 WHY INVEST IN STOCKS? Part 1 Diane DeGrand President, Milwaukee Chapter

2. Course of Study for Beginning Investors Class 1 2 Disclaimer : All stock references are meant to be used for educational purposes. No recommendation for purchase or sale is intended or implied.

3. Course of Study for Beginning Investors Class 1 3 FINANCIAL FREEDOM What does it mean? Some examples –Travel anywhere, anytime –Help the grandkids –Eat steak and sip good martinis –Not worry about emergencies

4. Course of Study for Beginning Investors Class 1 4 WANTS AND NEEDS Travel Dining out New car every three years Charitable contributions Plastic surgery Gasoline Health insurance Pay bills on time Property insurance Prescription drugs Food

5. Course of Study for Beginning Investors Class 1 5 HOW WILL YOU REACH YOUR GOALS? Fully fund your 401K Move to Jamaica Create and fund an IRA Win the Powerball lottery Invest small sums regularly in stocks Stuff $100 in your mattress every payday Marry a wealthy widow(er) Buy US Savings Bonds Buy a bigger house Expand a collection

6. Course of Study for Beginning Investors Class 1 6 Lottery IRA 401K Inheritance Passbook Savings Account Savings/Corporate/Municipal Bonds Stock Portfolio ARE YOU IN CONTROL?

7. Course of Study for Beginning Investors Class 1 7 DO YOU HAVE A PLAN? An Oil Well A Budget Collectibles A Pension The Winning Numbers A Rich Uncle Social Security Gold

8. Course of Study for Beginning Investors Class 1 8 WHATEVER YOUR PLAN, PAY YOURSELF FIRST!

9. Course of Study for Beginning Investors Class 1 Which would you take? 9 A million dollars or one cent doubled each day for 30 days?

10. Course of Study for Beginning Investors Class 1 10 COMPOUNDING Day 1$.01 Day 2$.02 Day 3$.04 Day 4$.08 Day 5$.16 Continue this pattern for 30 days ……

11. Course of Study for Beginning Investors Class 1 11 …… Day 29$2,684,355 Day 30$5,368,709 What was the growth rate? 100% compounded daily What kind of growth might be reasonable? How about 15% compounded annually?

12. Course of Study for Beginning Investors Class 1 12 Fifteen percent over five years doubles your money! Take your calculators and start with $100. Multiply by 1.15 to see the value after one year at 15% annual compounded growth. Do this four more times to see the value at the end of five years!

13. Course of Study for Beginning Investors Class 1 13 $100 x 1.15 = $115 at end of Year 1 $115 x 1.15 = $132 at end of Year 2 $132 x 1.15 = $152 at end of Year 3 $152 x 1.15 = $175 at end of Year 4 $175 x 1.15 = $201 at end of Year 5 HERE ’ S THE NUMBERS! Is there a quick way to determine how long it takes to double your money?

14. Course of Study for Beginning Investors Class 1 14 RULE OF 72 Divide 72 by the growth rate you desire. The answer is close to the time it will take to double your money. 72 divided by 15 gives you 4.8 72 divided by 12 gives you 6

15. Course of Study for Beginning Investors Class 1 15 LET’S CHECK... $100 X 1.12 = $112 at end of Year 1 $112 X 1.12 = $125 at end of Year 2 $125 X 1.12 = $140 at end of Year 3 $140 X 1.12 = $157 at end of Year 4 $157 X 1.12 = $176 at end of Year 5 $176 X 1.12 = $197 at end of Year 6 AWESOME!

16. Course of Study for Beginning Investors Class 1 16 So … How long will it take to double your money at 11% Did you get about 6.5 years? AWESOME! (72/11 = 6.5454…)

17. Course of Study for Beginning Investors Class 1 17 WHAT GENERATES THE BEST RETURNS? Passbook Savings Pre-tax IRA contributions Savings Bonds Common Stocks Real Estate Collectibles

18. Course of Study for Beginning Investors Class 1 18 Here ’ s how some of the financial asset classes stack up. All asset classes begin in 1925 with a value of $1.00.

19. Course of Study for Beginning Investors Class 1 19 If common stock is the best investment over the long term, what is the potential risk?

20. Course of Study for Beginning Investors Class 1 20