Why You Should Invest In The Market Short

Women and Investing Smart Women Finish Rich Presented by Lisa Marie Brugman CA Insurance License # 0C97144 Insurance Agent for Advisors Wealth Management, Inc. New York Life Insurance Registered Representative Owner, Financial Advisor for NYLIFE Securities, LLC. Rep/Agent # 084584 Securities offered through NYLIFE Securities, LLC. Member FinRA, SIPC Blue Coast Financial Advisor Independent Owner

Agenda:  Investment Basics  Why be in the Market  Smart Women Finish Rich

Investment Basics  Stocks  Bonds  Mutual Funds  Annuities

Stocks  Stocks are ownership  A Corporation issues stock  When an investor purchases stock, she becomes part owner of the corporation.  Stocks as an investment  An investor purchases a share of stock; the price of the share increases; the investor sells it. I.e. –You buy a share of Disney at $3 /share and then sell it for $8 /share; You made $5 /share.  This is Capital Appreciation; Buy low Sell high  An investor holds her shares; the Corporation declares a profit and distributes a portion to the share holders, (investors).  When profits are distributed by a corporation; it is called a dividend.

Bonds  Bonds are loans (or debt)  The government, its agencies, or municipalities can issue bonds.  Corporations can issue bonds.  If a corporation wants to raise capital, and it doesn’t want to issue more stock, it may make a bond offering.  A bond offering may be $1000 bond at a fixed rate, due in a set number of years. I.e. XYZ Co. -$1000, 6% due in 10 years -An investor purchases a bond for $1000; she will receive interest payments of 6% each year; in 10 years, the investor can cash in her bond for her $1000 investment.  The investors lets XYZ Co. “borrow” $1000 for a 10 year period. In return the investor will receive income of 6% a year during that time period.

Stocks & Bonds Why should you invest in stocks and bonds? Over the long run, stock and bond investments have out-paced inflation. In a portfolio, stocks provide growth and a hedge against inflation; bonds provide stability and income. An accurate assessment of your goals, needs, time frames, and risk tolerances are needed to develop the best investment strategy and create the right portfolio balance of stock and bond investments.

Other Investments: Mutual Funds A mutual fund is a pooling of investor dollars to purchase stocks, bonds, or both in a portfolio to meet a specified investment goal. An investor can invest a fixed amount each month; as little as $25 per month. MFs can help diversify your investment portfolio, - a typical fund holds an average of 125 companies1. Convenience Monthly or quarterly statements Automatic reinvestment There are over $7 trillion invested in the stock market through Mutual Funds2. 1Morningstar 2Investment Company Institute

Other Investments: Annuities Are an Insurance Company Product Fixed Annuities A contract between an annuitant (investor owner) and an insurance company for a specific rate of return on an investment made. This investment is guaranteed not to lose the investment. Variable Annuities A contract between an annuitant and an insurance company The investment can be made in fixed accounts or variable sub-accounts. A sub-account is a pooling of investor dollars to purchase stocks, bonds, or both in a portfolio to meet a specified investment goal. This investment in NOT guaranteed. The investments results depend on the performance of the sub-accounts.

Why be in the Market

Inflation:  5% Historical Inflation Rate from 1970 - 2001  2.7% Inflation Rate for the last 10 years Source: Ibbotson Associates

Growth of $100,000 at Historical Rates of Inflation Assuming 10-Year Inflation Rate $800,000 Assuming 30-Year Inflation Rate $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 2002 2022 2032 2042 Source: Ibbotson Associates, 10-year historical inflation rate of 2.7%, 30-year historical inflation rate of 5.0% from 1970-2001. Assumes initial investment of $100,000 from 2002-2022. The above example is for illustrative purposes only, and is not meant to represent the performance of any particular Dreyfus investment.

Projected Life Expectancies Percentage of People Living to Age . . . 56% 42% 24% 10% 80 85 90 95 Age Source: National Center for Health Statistics, 2000.

 Investment Options Cash Bonds Stocks

Performance of the Major Asset Classes Performance - 12/31/1970 through $150,000 12/31/2001 $3,000 Initial Investment $120,000 Large Cap Stocks $113,844.40 Diversified Portfolio 60/40 $90,000 $92,632 Cost of College (4 yrs.) $92,000 $60,000 L/T Bonds $49,249.96 T Bills $30,000 $24,560.55 CPI $14,065.43 $0 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 Source: © Stocks, Bonds, Bills and Inflation 2001 YearbookTM , Ibbotson Associates, Chicago. Used with permission. All rights reserved. Past performance is no guarantee of future results. Large-cap stocks are represented by the S&P 500, an unmanaged index and a leading measure of stock market performance. Investors cannot invest directly in any index. Long-term bonds are represented by the 20-year U.S. government bond. The diversified portfolio is represented by 60% large-cap stocks and 40% long-term bonds. Source of College Costs: U.S. Department of Education, National Center for Educational Statistics. Treasury bills are debt instruments guaranteed by the U.S. government. Bonds are debt instruments representing promises to repay principal and pay interest with no “guarantee” attached. They generally involve credit, interest-rate and liquidity risk. Stocks are equity investments in business concerns and involve economic, market, interest-rate and company risks. Stock and bond prices fluctuate and are not fixed.

Retirement Needs vs. Major Asset Classes Performance - 12/31/1975 through 12/31/2001 $100,000 Initial Investment $4,500,000 $3,000,000 Large Cap Stocks $4,261,695 $2,000,000 $1,000,000 L/T Bonds $1,158,477 $500,000 CPI $340,655 $100,000 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 Source: ©Stocks, Bonds, Bills and Inflation 2001 YearbookTM , Ibbotson Associates, Chicago. Used with permission. All rights reserved. Past performance is no guarantee of future results. Large-cap stocks are represented by the S&P 500, an unmanaged index and a leading measure of stock market performance. Investors cannot invest directly in any index. Long-term bonds are represented by the 20-year U.S. government bond. Treasury bills are debt instruments guaranteed by the U.S. government. Bonds are debt instruments representing promises to repay principal and pay interest with no “guarantee” attached. They generally involve credit, interest-rate and liquidity risk. Stocks are equity investments in business concerns and involve economic, market, interest-rate and company risks. Stock and bond prices fluctuate and are not fixed.

Living in Retirement $4,261,695 Ending Assumptions: Value For 25 years at: Actual returns of Ibbotson Large Cap Stocks $203,000 5% Post Retirement $100,000 Income with a 3% Today Retirement inflation rate Income Current Income = Based on a 3% rate of inflation, a current income of $100,000 today would be the equivalent of an income of $203,000 in 25 years. A $100,000 investment in 1975 in the Ibbotson Large Cap Stock category, represented by the S&P 500 Index, would have grown to $4,261,695. The S&P 500 is an unmanaged index and a leading measure of overall stock market performance. Investors cannot invest directly in any index. Past performance is not indicative of future results. The above example is for illustrative purposes only and is not meant to represent the performance of any particular Dreyfus investment.

Monthly Investment Amount Required to Generate $60,000 Annual Income Monthly Investment $25,000 $20,000 $15,000 $10,000 $5,000 $0 5 10 15 20 25 30 35 40 Years Before Retirement (at age 60) Source: PaineWebber: The Big Shift Research Report; February 8, 1998. Assumptions: 7% pre-retirement investment return, 5% retirement income, 3% inflation.

Timing the Market is Difficult S&P 500 Annualized Returns for the period 9/81 - 12/01 10.7% 8.0% 6.2% 4.6% 3.2% 1.8% All Minus Minus Minus Minus Minus Trading 10 Best 20 Best 30 Best 40 Best 50 Best Days Days Days Days Days Days Source: Zweig Consulting, LLC. The S&P 500 is an unmanaged index and a leading measure of overall stock market performance. Investors cannot invest directly in any index. Past performance is not indicative of future results.

Gains and Losses of the S&P 500 1930 - 2001 Holding Period 1 Year 5 Years 10 Years 15 Years 20 Years % of time investors lost money 26% 5% 1% 0% 0% % of time investors lost more than 10% annually 13% 1% 0% 0% 0% % of time investors lost between 10% and 0% annually 14% 5% 1% 0% 0% Percent of time investors earned between 0% and 10% annually 17% 30% 38% 37% 30% Percent of time investors earned more than 10% annually 56% 64% 60% 63% 70% Source: Standard & Poor’s. Investors cannot invest directly in the S&P 500 Index. The S&P 500 is an unmanaged index and a leading measure of overall stock market performance. Investors cannot invest directly in any index. Past performance is no guarantee of future results.

Time Has Diminished the Risk of Loss 100% Stock Portfolio 1-Year Holding Period 10-Year Holding Period 15-Year Holding Period 4% 0% 26% 74% 96% 100% Gain Loss Source: Standard & Poor’s 1926-2001. In any 1-year holding period, over the past 75 years, there was a gain in 74% of the periods and a loss in 26% of the periods. In any 10-year holding period, over the past 75 years, there was a gain in 96% of the periods and a loss in 4% of the periods. In any 15-year holding period, over the past 75 years, there was a gain in 100% of the periods. Stock portfolio measured by the performance of the S&P 500 Index, an unmanaged index and a leading measure of overall stock market performance. Returns from actual investments will vary, and there can be no guarantee that any investment product will achieve any specific rate of return. Investors cannot invest directly in any index.

Time Has Diminished the Risk of Loss 60% Stock / 40% Bond Portfolio 1-Year Holding Period 10-Year Holding Period 15-Year Holding Period 0% 0% 23% 77% 100% 100% Gain Loss Source: Standard & Poor’s 1926-2001. In any 1-year holding period, over the past 75 years, there was a gain in 77% of the periods and a loss in 23% of the periods. In any 10- or 15-year holding period, over the past 75 years, there was a gain in 100% of the periods. Stocks measured by the performance of the S&P 500 Index, an unmanaged index and a leading measure of overall stock market performance. Bonds measured by long-term treasuries with maturities of 10 or more years. Assumes the portfolio is rebalanced every year. Returns from actual investments will vary, and there can be no guarantee that any investment product will achieve any specific rate of return. Investors cannot invest directly in any index.

The Time Value of Money 3000000 2500000 Account Values 2000000 Age Investors 1500000 Janet Susan 1000000 500000 0 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 Age in Years Janet contributed $2000/ yr. from age 19 yrs to 26 yrs. Susan contributed $2000/ yr. from age 27 yrs to age 65. Assuming a consistent 10% hypothetical growth rate. Returns however, on all investment products will fluctuate. Investment return and principal value will fluctuate and your investment value may be more or less than the original invested amount. This hypothetical illustration is for informational purposes only and is not meant to forecast or imply the performance of any investment vehicle.

Be Always Building your Security Basket Keep an Emergency Fund  6- 8 months salary  in a liquid account  **Remember this is for emergencies Plan your Estate  Prepare a Will or Living Trust  Keep it up to date  Make sure beneficiaries are correct and current  Be sure your Family knows its location  Have it reviewed by an attorney periodically Make sure you’re Properly Insured  Health Insurance  Life Insurance  Disability and Long Term Care  Home owners Insurance

Continue to Build your Dream Basket How to get to your dream basket goal: Time Frame Investment Type Less than 2 years Money Market 2 – 5 years Bonds, Bond Fund 5 – 10 years Balanced, Stock Fund 10 + years Growth Stock Fund

Where do I get started? Talk to a professional  She can help you determine your future need your savings ability your risk tolerance  She can help you understand ALL your choices Money markets, annuities or mutual funds? Retirement plan, mid-term or short-term goal Insurance coverages Trusts and Estate Planning

Talk to a Professional! Lisa Marie Brugman CA Insurance License # 0C97144 35 year, Whittier Resident Advisors Wealth Management, Inc. PO Box 11285 Whittier, CA 90603 888-987-WEALTH (9325) Insurance Agent for New York Life Insurance Blue Coast Financial Advisor Registered Representative Independent Owner for NYLIFE Securities, LLC. Rep/Agent # 084584 Securities offered through NYLIFE Securities, LLC. Member FinRA, SIPC

Why You Should Invest In The Market Short

by Lisa Brugman

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