What

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Whats Your Investment I.Q.?
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Prerequisites toInvestments

• Prepare financial statements
• Set financial goals
• Establish a spending plan
• Organize financial records
• Establish a positive credit history
• Maintain adequate insurance coverage

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Futures Contracts Collectibles
Pyramid of Investment Risk
Aggressive Growth, Junk Bonds, Stocks and Mutual
Funds
Increased Risk
Real Estate
High Quality Corporate Stocks, Bonds and Mutual
Funds
Life Insurance Investments Government
Securities
Insured Savings, Savings Bonds, Money Market
Funds, Certificates of Deposits
Goals Emergency Fund
Budget Financial Records
Credit Record
Life Disability
Health Property Liability
Financial Plan
Insurance
Financial Foundation
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Emergency Fund Financial Foundation
Goals
Budget
Life
Health
Credit Record
Financial Plan
Insurance
Property Liability
Financial Statements
Financial Records
Disability
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Futures Contracts Collectibles
Pyramid of Investment Risk
Aggressive Growth, Junk Bonds, Stocks and Mutual
Funds
Increased Risk
Real Estate
High Quality Corporate Stocks, Bonds and Mutual
Funds
Life Insurance Investments Government
Securities
Insured Savings, Savings Bonds, Money Market
Funds, Certificates of Deposits
Goals Emergency Fund
Budget Financial Records
Credit Record
Life Disability
Health Property Liability
Financial Plan
Insurance
Financial Foundation
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Every Little Bit Counts!
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Pay Yourself First at 5 interest Save this each
week In 10 years, you will have
7.00 4,720 14.00 9,440 21.00 14,160
28.00 18,880 35.00 23,600
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If you invest 1,000/year (19.20/week)
Interest Rate 5 years 10 years 15 years 20 years
5 5,524 12,578 21,578 33,065 6 5,637 13,181
23,276 36,786 7 5,751 13,816 25,129 40,995 8
5,867 14,487 27,152 45,762 9 5,985 15,193 26,
361 51,160 10 6,105 15,937 31,772 57,257 11
6,228 16,722 34,405 64,203 12 6,353 17,548 37,2
79 75,052
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The Rule of 72 (years to double your money)
72 Years to double money Interest Rate
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The Rule of 72 (interest rate needed based on
time) 72 Interest Rate Required Years to
double Money
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Investments
Actively Manage Understand Risk Know Your Tax
Bracket Appropriate For Your Timeline Protect
Against Inflation
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Its Not What You Earn, Its What You Keep
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Rate of Return to Account for Inflation and Taxes
Inflation Rate 100 - Federal, State Local Tax
Brackets
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Rate of Return to Account for Inflation and Taxes
3 100 - (2852.5) RR 4.65
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Tax Free Vs. Taxable Yield
Tax Equivalent Yield
tax free rate (5) 100 - (tax rate) (28)
5 6.9 72
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TAX DEFERRAL MAGIC 2,000 Annual Investment _at_ 5
Years Tax Deferred Taxed Invested Investment Inve
stment Savings
5 11,603.83 11,133.26 470.57
10 26,413.57 24,420.08 1,993.49 15 45,314.98 40
,277.04 5,037.94 20 69,438.49 59,201.28 10,237.21
25 100,226.90 81,786.14 18,440.76 30 139,521.55
108,739.69 30,781.86 35 189,672.58 140,906.98 48
,765.60 40 253,679.42 179,296.56 74,382.86
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Time is a valuable tool
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EARLY INVESTOR Depositing 1,000 a year at
8 1,083 6,397 15,939 Depositing nothing
more but building at 8 17,267 35,471 78,934
175,656 390,895
LATE INVESTOR Depositing
nothing 0 0 0 Depositing 1,000 a
year at 8 1,083 15,939 51,939
130,344 306,000
Year 1 Year 5 Year 10 Year 11 Year 20 Year
30 Year 40 Year 50
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INVESTING NOW versus INVESTING LATER AT 9
INTEREST
Monthly Total End Result
Beginning Amount Contribution in 20
Yrs Now 50.00 12,000
33,394 In 10 years 150.00 18,000
29,027
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Invest 1,000 a year _at_ 6 for 20
years 36,790
You have earned 16,790!!!
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Investment Alternatives
Mutual Funds Stocks and Bonds Treasury
Certificates
Real Estate Futures Collectibles
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Portfolio Selection
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Low Risk

• Insured Savings
• Savings Bonds
• Certificates of Deposit
• Money Market Deposit Accounts

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Limited Risk

• Blue chip stocks
• High quality bonds
• Conservative mutual funds
• Government securities

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Moderate Risk

• Growth stocks
• Real estate
• Mutual funds
• Medium rated corporate, municipal and
  zero-coupon bonds
• Small company stocks

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High Risk
Futures, options, and derivatives Aggressive
growth, stocks and mutual funds Junk or
low rated bonds Collectibles, precious metals
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Balancing
Risk
Reward
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Investment Strategies

• Invest regularly by dollar-cost averaging
• Diversify your portfolio
• Stay invested during down markets
• Check your investments regularly
• Be patient

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Time makes a Difference!
Since 1950, if stocks were held for ? 10
years -- no risk of loss ? 5 years -- 5
chance of loss ? 1 year -- 23 chance of loss
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MUTUAL FUNDS
Type Objective Investments Type of Investor
Balanced Conserve principal, One-third
bonds, Older, income- some growth two-third
stocks oriented Income- Moderate growth Common
Stocks Middle-aged, growth with income (blue
chip) conservative Growth High growth, Common
stocks Younger, low income (speculative)
aggressive Bond Income Bonds Older,
income- oriented
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MUTUAL FUNDS
Type Objective Investments Type of Investor
Preferred Income Preferred stock Older,
income-oriented Specialized Various Gold
stocks, Depends on objective, specialized but
should only be a industry stocks, small portion
of convertible bonds, investments etc. Money
market Income and Money market Anyone needing
income safety of instruments and
safety principal
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Limited Risk Portfolio
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Moderate Risk Portfolio
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High Risk Portfolio
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Where can you go for Financial Planning
Information?
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Who would you want to be your financial
professional?
1. A chartered life underwriter 2. A
certified financial planner 3. An
attorney 4. An accredited
financial counselor 5. A financial
manager 6. An accountant
7. A real estate broker 8. A stock
broker
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CRITERIA FOR SELECTING FINANCIAL ADVISORS
Training Professional Improvement Registrations/li
censes Types of clients and income of
clients References
Professional designations Length of time in
business Form of compensation
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Questions to Ask Your Potential Financial
Professional
1. What is your professional background? 2. How
long have you been doing financial
planning? 3. How long have you been in the
community? 4. Who can vouch for your professional
reputation? 5. Will you provide references from
three or more clients that you have counseled
for at least two years?
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More Questions for a Financial Professional
6. Will you manage my account(s) or will it be
an associate? 7. May I see examples of your
plans and monitoring reports you have
drawn up for other investors? 8. Are
you a member of any financial planning trade
organizations? 9. If you earn commissions, from
whom? 10. What level of investment risk do you
generally use?
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How is a Financial Professional Paid?
Fee Only Planner Commission Only Planner Fee and
Commission Planner
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Keys to Success
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Whats Your Investment I.Q.?