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investing.ppt
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investing.ppt

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  • 1. Investing in the Stock Market
  • 2. The stock market is often compared to gambling.
  • 3. The stock market is actually a lot more like gardening.
  • 4. Planting
  • 5. Growing
  • 6. Harvesting
  • 7. Damage Control
  • 8. And maybe more damage control
  • 9. Creativity
  • 10. Money is the language of cooperation. http://www.luthersem.edu/images/home/Student_group_holding_hands2.jpg
  • 11. http://www.luthersem.edu/images/home/Student_group_holding_hands2.jpg http://elver.cellosoft.com/Milton_Friedman.jpg Milton Friedman Economist, University of Chicago Free markets allow thousands of people to cooperate in making an ordinary pencil.
  • 12. Social Impact of Investing
    • How do companies use the money you invest?
    • How does this affect ordinary people?
  • 13. Social Impact of Investing
    • How do companies use the money you invest?
    • How does this affect ordinary people?
    expand existing businesses start new businesses
  • 14. Social Impact of Investing
    • How do companies use the money you invest?
    • How does this affect ordinary people?
    expand existing businesses start new businesses creates more jobs creates higher-paying jobs
  • 15.
    • Open a Roth IRA
    But how do I do it? Buy shares of SSO do it right now, takes 10 minutes once a year, just 10 minutes (once a month is even better!)
  • 16. How hard is it to set up a Roth IRA?
  • 17.
    • Go to office of a discount stock broker
    • Fill out a form to open a Roth IRA account
    • Give them $500 to put in your account
    Opening your Roth IRA
  • 18.
    • Go to office of a discount stock broker
        • can also do this on-line, if you like
    • Fill out a form to open a Roth IRA account
    • Give them $500 to put in your account
    Opening your Roth IRA
  • 19.
    • Go to office of a discount stock broker
        • can also do this on-line, if you like
    • Fill out a form to open a Roth IRA account
        • takes about 10 minutes
        • they give you an account number and password
    • Give them $500 to put in your account
    Opening your Roth IRA
  • 20. Discount stock brokers are very different Charles Schwab TD Ameritrade E*Trade Fidelity Fee per purchase Scottrade $7 $13 $10 $13 $20 $500 $1,000 No minimum $1,000 No minimum Minimum amount you may invest http://scottrade.com/online_broker_comparison/discount_brokerage_comparison.asp
  • 21.
    • Scottrade is the cheapest right now
      • only $7 fee for each purchase
      • only $500 minimum is needed to invest
      • as fast as opening a checking account
  • 22. Roth IRA
  • 23. Roth IRA Instead of choosing this box for an individual account…
  • 24. Roth IRA Choose this box for a Roth IRA account
  • 25. Roth IRA Choose this box for a Roth IRA account and write in “Roth” on this line
  • 26.
    • Account number
    • Password
    • Deposit slip for your $500
    What you get
  • 27.
    • Open a Roth IRA
    But how do I do it? Buy shares of SSO do it right now, takes 10 minutes once a year, just 10 minutes (once a month is even better!)
  • 28. The Next Day Cash $500 Total Account Value $500 Your new Roth IRA:
  • 29. SSO costs $70 for one share You buy 7 shares for $490 Fee is $7 for the SSO purchase Buy SSO Cash $500 Total Account Value $500 Your new Roth IRA:
  • 30. SSO costs $70 for one share You buy 7 shares for $490 Fee is $7 for the SSO purchase Buy SSO Cash $500 Total Account Value $500 Your new Roth IRA: SSO – 7 shares $490 Cash $3 Total Account Value $493 After SSO purchase:
  • 31. SSO costs $70 for one share You buy 7 shares for $490 Fee is $7 for the SSO purchase Five years pass WOW!!! Cash $500 Total Account Value $500 Your new Roth IRA: SSO – 7 shares $490 Cash $3 Total Account Value $493 After SSO purchase: SSO – 7 shares $980 Cash $3 Total Account Value $983 Five years later:
  • 32. Time
  • 33. Time We usually just think of time as something that turns young people into old people.
  • 34. In your job, YOU do all the work.
  • 35. In your job, YOU do all the work. In the stock market, TIME does all the work.
  • 36. but only if you turn on the faucet In your job, YOU do all the work. In the stock market, TIME does all the work.
  • 37. 1. Open a Roth IRA 2. Buy shares of SSO In your job, YOU do all the work. In the stock market, TIME does all the work.
  • 38. But how do I get my money back?
  • 39. But how do I get my money back? Easy - go to broker’s office & ask them for a cashier’s check. For larger accounts, they even give you a regular checkbook, just like an ordinary checking account.
  • 40.
    • Open a Roth IRA
    Two Easy Steps Buy shares of SSO do it right now, takes 10 minutes once a year, just 10 minutes (once a month is even better!)
  • 41. Why is SSO a simple, safe strategy for beginners?
  • 42. 1950 Now Combined Share Prices of the Biggest 500 Companies (S&P500) The basic direction of the US stock market is overwhelmingly upwards http://finance.yahoo.com/q/bc?s=%5EGSPC&t=my&l=on&z=l&q=l&c=
  • 43.
    • SSO
    • combination of the largest 500 U.S. companies
    • stock price has risen at 14.8% per year for 50 years
    SSO stock price General Motors 1962 Now http://finance.yahoo.com/q/bc?t=my&s=GM&l=on&z=l&q=l&c=&c=%5EGSPC
  • 44. When you buy SSO, your only risk is that the entire United States economy will continue to succeed as it has for 200 years.
  • 45.
    • What about stock market crashes?
    crash of 1973-1974 crash of 1987 crash of 2000 still haven’t recovered! SSO stock price http://finance.yahoo.com/q/bc?t=my&s=GM&l=on&z=l&q=l&c=&c=%5EGSPC
  • 46. When you buy SSO every year, crashes average out quickly. http://finance.yahoo.com/q/bc?t=my&s=SPY&l=on&z=l&q=l&c= Purchases in later years are much cheaper Suppose you started buying SSO at the worst possible time March 24, 2000
  • 47. When you buy SSO every year, crashes average out quickly. http://finance.yahoo.com/q/bc?t=my&s=SPY&l=on&z=l&q=l&c= Of the last 8 purchases, 7 are already profitable Price today Suppose you started buying SSO at the worst possible time March 24, 2000
  • 48. Buy SSO on your birthday each year. http://www.americangirlplace.com/images/chi/pkgs/img_chi_pkgs_party.jpg
  • 49. Buy SSO on your birthday each year. http://www.americangirlplace.com/images/chi/pkgs/img_chi_pkgs_party.jpg once a month is even better!
  • 50. Is there a better strategy than SSO?
  • 51. EEM stock price is increasing at 36% per year SSO Standard & Poor’s 500 Index Fund (Ultra) - largest 500 U.S. companies EEM Emerging Markets Index Fund (iShares ) - large companies outside the U.S. http://finance.yahoo.com/q/bc?s=SPY&t=my&l=off&z=l&q=l&c=eem,iws SSO stock price is increasing at 14.8% per year
  • 52. SSO The 500 largest US companies Exchange Traded Funds Each is a group of similar stocks Individual Companies Safest Riskiest Choosing Your Risk Level
  • 53. SSO The 500 largest US companies Exchange Traded Funds Each is a group of similar stocks Individual Companies Safest Riskiest Choosing Your Risk Level Just one choice!
  • 54. SSO The 500 largest US companies Exchange Traded Funds Each is a group of similar stocks Individual Companies Safest Riskiest Choosing Your Risk Level Just one choice! 600 choices
  • 55. SSO The 500 largest US companies Exchange Traded Funds Each is a group of similar stocks Individual Companies Safest Riskiest Choosing Your Risk Level Just one choice! 600 choices 8000 choices
  • 56. Exchange Traded Funds (ETFs) An ETF is a group of related stocks
  • 57. SSO Ultra S&P500 ETF
  • 58. SSO Ultra S&P500 ETF Includes many different companies
  • 59. SSO Ultra S&P500 ETF Includes 500 different companies Diversified across many sectors
  • 60. IYE Energy ETF
  • 61. IYE Energy ETF Includes many different companies
  • 62. IYE Energy ETF Includes many different companies Nearly all are in the energy sector
  • 63. Why is a Roth IRA the best kind of account?
  • 64.
    • typical old-style pension plan
    • 401(k) plan
    • Roth IRA
    • Roth 401(k)
    Retirement Basics
  • 65.
    • typical old-style pension plan
      • you get exactly $3000 per month until you die
      • amount never rises (worth 3.4% less each year)
    • 401(k) plan
    • Roth IRA
    • Roth 401(k)
    Retirement Basics
  • 66.
    • typical old-style pension plan
      • you get exactly $3000 per month until you die
      • amount never rises (worth 3.4% less each year)
    • 401(k) plan much better
      • you may invest the money, get 14.8% more each year
      • some employers make matching contributions
      • but you still have to pay tax
    • Roth IRA
    • Roth 401(k)
    Retirement Basics
  • 67. Ted Benna 401(k) Retirement Plan https://www.expertplan.com/images/tedbenna2.jpg
  • 68.
    • Your best deal if your employer makes a large matching contribution
    • Some employers put $50 into your 401(k) account for every $100 you put in
    • Basically like getting 50% interest, an incredible deal
    401(k) Retirement Accounts
  • 69.
    • typical old-style pension plan
      • you get exactly $3000 per month until you die
      • amount never rises (worth 3.4% less each year)
    • 401(k) plan much better
      • you may invest the money, get 14.8% more each year
      • some employers make matching contributions
      • but you still have to pay tax
    • Roth IRA
    • Roth 401(k)
    Some Brief History
  • 70.
    • typical old-style pension plan
      • you get exactly $3000 per month until you die
      • amount never rises (worth 3.4% less each year)
    • 401(k) plan much better
      • you may invest the money, get 14.8% more each year
      • some employers make matching contributions
      • but you still have to pay tax
    • Roth IRA also better, but unlike 401(k)
      • you may invest the money, get 14.8% more each year
      • employer not involved, no matching contributions
      • you pay no tax
    • Roth 401(k)
    Some Brief History
  • 71.
    • you pay NO TAX on Roth IRA
    • you can only contribute $4000 per year
    • start receiving retirement pay at age 60
    • no penalty for early withdrawal
      • but pay 15% capital gains tax on any increases
    Roth IRA William V. Roth, Jr. U.S. Senator,Delaware http://www.sussexcountyonline.com/campaign2000/results/images/roth.jpeg www.fairmark.com/rothira/roth101.htm Roth Individual Retirement Account -1998
  • 72.
    • Deposit $4000 into a Roth IRA in 2007
      • Invest the $4000 in a good stock (like SSO)
      • Stock price increases 10% by 2008 ($400)
    • Roth IRA is worth $4400 in 2008
      • you lose your job, and you need money
      • withdraw the entire $4400 to live on
      • pay 15% tax on $400 increase ($60 tax)
      • you have $4340 left to live on
    15% Capital Gains Tax
  • 73.
    • typical old-style pension plan
      • you get exactly $2000 per month until you die
      • amount never rises (worth 3.4% less each year)
    • 401(k) plan much better
      • you may invest the money, get 14.8 % more each year
      • some employers make matching contributions
      • but you still have to pay income tax each year
    • Roth IRA also better, but unlike 401(k)
      • you may invest the money, get 14.8 % more each year
      • employer not involved, no matching contributions
      • you pay no taxes
    • Roth 401(k)
    Some Brief History
  • 74.
    • typical old-style pension plan
      • you get exactly $2000 per month until you die
      • amount never rises (worth 3.4% less each year)
    • 401(k) plan much better
      • you may invest the money, get 14.8 % more each year
      • some employers make matching contributions
      • but you still have to pay income tax each year
    • Roth IRA also better, but unlike 401(k)
      • you may invest the money, get 14.8 % more each year
      • employer not involved, no matching contributions
      • you pay no taxes
    • Roth 401(k) best of both! (new 2006)
    Some Brief History
  • 75.
    • Open a Roth IRA
    • Buy shares of SSO
    Review
  • 76.
    • Open a Roth IRA
      • Go to office of a discount stock broker
        • can also do this on-line, if you like
    • Buy shares of SSO
    Review
  • 77.
    • Open a Roth IRA
      • Go to office of a discount stock broker
        • can also do this on-line, if you like
      • Fill out a form to open a Roth IRA account
        • they give you an account number and password
    • Buy shares of SSO
    Review
  • 78.
    • Open a Roth IRA
      • Go to office of a discount stock broker
        • can also do this on-line, if you like
      • Fill out a form to open a Roth IRA account
        • they give you an account number and password
      • Give them $500 to put in your account
    • Buy shares of SSO
    Review
  • 79.
    • Open a Roth IRA
      • Go to office of a discount stock broker
        • can also do this on-line, if you like
      • Fill out a form to open a Roth IRA account
        • they give you an account number and password
      • Give them $500 to put in your account
    • Buy shares of SSO
      • Go to WWW & log into new Roth IRA
      • Buy shares of SSO with your $500
    Review
  • 80. http://images.amazon.com/images/G/covers/0/45/116/520/0451165209.l.gif http://www.edicionesobelisco.com/portadas/3717.jpg http://www.pragma.cz/files/2f24f9b0ed5a310f5fab5bf90ff65bb6.jpg www.buch-des-tages.de/ Archiv/20020707.htm http://www.qbooks.com.tw/C_qbooks/book_pic/BIIXXC100004.jpg http://www.ujkonyvpiac.hu/images/ujkonyvek/Babilon.jpg http://www.nnbh.com/base/63/images/9057120763.jpg http://www.cote100.com/fr/boutique/boutique_desc/images/babylone_small.gif
  • 81. Save or invest 10% of each paycheck as soon as you’re paid. Then pay your new bills. Pay yourself first.
  • 82.
    • My job at Quizno’s doesn’t pay that much.
      • shouldn’t I wait until I get a real job?
    But I’m just a kid.
  • 83.
    • My job at Quizno’s doesn’t pay that much.
      • shouldn’t I wait until I get a real job?
    But I’m just a kid. No. You need actual practice in investing.
  • 84.
    • My job at Quizno’s doesn’t pay that much.
      • shouldn’t I wait until I get a real job?
    • I already have a lot of student loan debt
      • shouldn’t I pay that off first?
    But I’m just a kid. No. You need actual practice in investing.
  • 85.
    • My job at Quizno’s doesn’t pay that much.
      • shouldn’t I wait until I get a real job?
    • I already have a lot of student loan debt
      • shouldn’t I pay that off first?
    But I’m just a kid. No. You need actual practice in investing. No. You need to invest even when you’re in debt.
  • 86. Then pay your new bills. Use the next 20% of each paycheck to pay a portion of your debt. What if I’m in debt? Save or invest 10% of each paycheck as soon as you’re paid.
  • 87. Pay all credit card debt first
    • your absolute highest priority
    • credit card interest is ridiculous, often 20%
    www.best-credit-card-deals.com/images/best-credit-card-deals.jpg
  • 88. Giving
    • get started now
    • it’s important to practice giving, even when you don’t have much
  • 89.  
  • 90.  
  • 91. Jennifer Thompson 123-45-6789 3 Jan 08 sister x x 100 If you die, when your new baby sister turns 60, she’s already a multimillionaire TAX-FREE
  • 92. American Red Cross FEIN 123-45-6789 charitable foundation x x 100 If you die, your favorite charity gets a million dollars
  • 93. CSU Student Investing Club
    • every Monday
    • 6 PM
    • Rockwell Hall, Room 119
    You will not be spending any money!
  • 94. Further Reading

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