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

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

3. 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)

4. 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, $43, $165, ???

5. 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

6. 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

7. Pick your own mutual fund
Reading:

8. 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…..

9. 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, $43, $165, ???

10. Retirement Gamble PBS Video
2013 PBS special on retirement investment dangers….
Retirement accounts:
401-K
IRA
Roth IRA
Video Link

11. The Power of Compounding