1. Real Skills  Real Experiences  Real Life www.bestprep.org The NCCEE and the Financial Planning Associations of Charlotte and Raleigh gratefully acknowledge BestPrep and The Foundation for Financial Planning for making the Financial Matters initiative available in North Carolina.

2. Investing Matters Real Skills  Real Experiences  Real Life www.bestprep.org

3. Goals of today’s presentation Ground yourself in the basics Understand risk Create a strategy Get Started Investments are not FDIC insured, may lose value, are not a deposit, have no bank guarantee and are not insured by any government agency. Investing in a mutual fund involves risks, including the possible loss of principal. The prospectus contains more complete information on the investment objectives, risks, charges and expenses of the fund, which investors should read and consider carefully before investing.

4. What does investing mean to you? Money earned by investing gives you: Freedom to make choices Protection of your money’s value Financial security Real Skills  Real Experiences  Real Life www.bestprep.org

5. What is investing?  Putting your time or money into something with hopes of getting something greater in return  Invest to create value Real Skills  Real Experiences  Real Life www.bestprep.org

6. Who can invest? True or False Only adults can invest? True, but Students can open a custodial investment account with their parents. Real Skills  Real Experiences  Real Life www.bestprep.org

7. Why should I invest?  Which answers are correct? To set money aside for financial independence from work To build savings To meet long term goals To beat inflation Real Skills  Real Experiences  Real Life www.bestprep.org

8. Investing Basics Saving vs. Investing  Save for short-term goals (< 5 years) Saving is setting money aside Saving is low risk but earns a low return  Invest for long-term goals (>5 years) Investing is putting money into something with the hope of getting something greater in return Investing is more risky than saving, but has the potential for higher returns Real Skills  Real Experiences  Real Life www.bestprep.org

9. Investments types  Cash  Bonds  Stocks Real Skills  Real Experiences  Real Life www.bestprep.org

10. Cash Accounts  Accounts you can access quickly Bank accounts (checking & savings) CDs (Certificates of deposit) Money market accounts Real Skills  Real Experiences  Real Life www.bestprep.org

11. Bonds  You lend money to the government or a company Examples may include schools or municipalities Real Skills  Real Experiences  Real Life www.bestprep.org

12. Stocks You own shares of the company Many investors buy companies they know Real Skills  Real Experiences  Real Life www.bestprep.org

13. How much risk should I take?  Ask yourself… What is your goal for money you’ve invested? Can you sleep at night knowing the money you’ve invested may decrease? Are you a risk taker? Do you like to know your money is remaining stable? Real Skills  Real Experiences  Real Life www.bestprep.org

14. Investment Risk MUNICIPAL BONDS LARGE-CAP STOCKS INTERNATIONAL STOCKS CASH EQUIVALENTS GOVERNMENT BONDS CORPORATE BONDS MID-CAP STOCKS SMALL-CAP STOCKS Real Skills  Real Experiences  Real Life www.bestprep.org  Lower risk, lower potential return Higher risk, higher potential return 

15. Real Skills  Real Experiences  Real Life www.bestprep.org Managing Risk - Diversification Snow Blowers Lawn Mowers Winter Spring Summer Fall

16. Inflation Risk Private Four-Year College Tuition 1 1979-80$9,501 1989-90$14,997 1999-00$20,047 2008-09$24,649 Movie Ticket 2 1980$2.69 1990 $4.22 2000 $5.39 2009$7.50 1 Source: The College Board, Trends in College Pricing 2 Source: National Association of Theatre Owners Real Skills  Real Experiences  Real Life www.bestprep.org

17. How much and when should I invest?  Any amount counts  Just get started  Time is on your side. Take advantage of compounding. “Time and tide wait for no man.” Mark Twain Real Skills  Real Experiences  Real Life www.bestprep.org

18. Time is on Your Side Compounding  The more time you have the more you can benefit from compound growth Tim begins Sally waits until investing at age 15. she is age 25. Both invest $500 per year. Who will have more? Real Skills  Real Experiences  Real Life www.bestprep.org

19. Time is on Your Side Compounding Tim earned $145,168 Sally earned $77,381 Hypothetical Example: At age 15, Tim begins investing $500 per year. Sally waits until age 25 to invest the same amount. Both earn 6%* annualized return. Age * 6% is not a guaranteed rate of return. Real Skills  Real Experiences  Real Life www.bestprep.org

20. Consider Your Emotions Emotion is NOT a Strategy Real Skills  Real Experiences  Real Life www.bestprep.org

21. Strategy for Investing Mutual Funds Pool of Professional Management Diversified Portfolio Investment Objective Stocks and/or Bonds, etc. Capital Gains Dividends Share in underlying Investment Results (Gains or Losses)

22. Strategy for Investing Dollar Cost Averaging Hypothetical Example: Year_$$_Price/share# of Shares 1929$100 $10 10 1930$100 $4 25 1931$100 $2 50 1932$100 $1 100 1933$100 $2 50 1934$100 $4 _25 $600 260 Total value of all the shares after year 6 = $1040 Results in 21.84% average annual return Real Skills  Real Experiences  Real Life www.bestprep.org

23. Strategy for Investing Dollar Cost Averaging  Works if you are willing to continue during bad markets. You need to keep investing when share prices are declining.  Dollar cost averaging does not guarantee a profit and does not prevent against a loss.  Lessens the emotional roller coaster of investing. Real Skills  Real Experiences  Real Life www.bestprep.org

24. What can I do now?  Identify goals  Create a strategy  Get started  Diversify, diversify, diversify  Use resources/Get advice Real Skills  Real Experiences  Real Life www.bestprep.org

25. Resources for You!  Keep one finger on the pulse of the market: www.investopedia.com www.mfea.com http://finance.yahoo.com/ www.morningstar.com http://money.cnn.com/data/dow30  Look into an investment account for long-term goals www.sharebuilder.com www.schwabmoneywise.com Real Skills  Real Experiences  Real Life www.bestprep.org

26. Thank You! ©2007 BestPrep NCCEE gratefully acknowledges the Foundation for Financial Planning for providing financial support to fund this project. We also are indebted to the BestPrep for sharing materials with NCCEE and to the Financial Planning Associations of Raleigh and Charlotte for their help in recruiting volunteers for this program.