INVESTMENT BASICS Jim Froman, Financial Advisor
"What is the most important strategy for           investing money?"       A. Have a Plan       B. Time       C. Consisten...
Strategy 1. Have a Plan
Strategy 2. Time is on your side
Put time on your side        $4,000 a year, 10 percent returnAGE              BILL           TOM25 to 34         0        ...
Start Saving NOWAge             Monthly       Years to age              contribution    65 ($1million)25               $15...
Strategy 2. Time is on your side
Strategy 3. Consistency and                  Compounding                                                   76,301Save $50a...
Strategy 4. Rate of Return
The “Rule of 72”• 72/Rate of Return = Years it takes to double  your investment.  – Example                     72/6% = 12...
Strategy 5. Investment Options  • Stocks  • Bonds  • Mutual Funds
Stocks: Sharing a               CorporationStocks are pieces of the corporate pie. When you buystocks, or shares, you own ...
Bonds: Financing the Future      Bonds are loans that investors make to corporations and       governments. The borrowers ...
Mutual Funds:           Putting It Together A Mutual Fund is a collection of stocks, bonds, or other securities owned by a...
Strategy 6. Understand Inflation
Strategy 6. Understand Inflation
Summary• Time is on your side. The sooner you begin saving, the  quicker you can make your dreams come true. No  amount is...
It’s never too early to start!
Use credit union investment basics seminar 3 27 12
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Use credit union investment basics seminar 3 27 12

  1. 1. INVESTMENT BASICS Jim Froman, Financial Advisor
  2. 2. "What is the most important strategy for investing money?" A. Have a Plan B. Time C. Consistency D. High Rate (or Rate of Return) E. Compounding F. All of the Above F. All of the Above
  3. 3. Strategy 1. Have a Plan
  4. 4. Strategy 2. Time is on your side
  5. 5. Put time on your side $4,000 a year, 10 percent returnAGE BILL TOM25 to 34 0 40,00035-44 40,000 0Amount 40,000 40,000investedVALUE at 68,850 186,380age 45
  6. 6. Start Saving NOWAge Monthly Years to age contribution 65 ($1million)25 $157 4030 $261 3535 $439 3040 $747 2545 $1,306 2050 $2,393 1555 $4,841 1060 $12,807 5 *Assumes 10% annual Rate of Return
  7. 7. Strategy 2. Time is on your side
  8. 8. Strategy 3. Consistency and Compounding 76,301Save $50a Month With a 29,7755% Yield 7,764 3,400 614 1 year 5 year 10 year 25 year 40 year
  9. 9. Strategy 4. Rate of Return
  10. 10. The “Rule of 72”• 72/Rate of Return = Years it takes to double your investment. – Example 72/6% = 12 years to double 72/12% = 6 years to double A $2,000 investment, with a return of 12%, will equal $4,000 in 6 years. There can be no guarantee that any investment will double in any period of time. The Rule of 72 is a mathematical concept and is not illustrative of any specific product offered by UVEST. It is important to note that the Rule of 72 does not guarantee investment results or function as a predictor of how your investment will perform. It is simply an approximation of the impact a targeted rate of return would have. Investments are subject to fluctuating returns and there can never be a guarantee that any investment will double in value.
  11. 11. Strategy 5. Investment Options • Stocks • Bonds • Mutual Funds
  12. 12. Stocks: Sharing a CorporationStocks are pieces of the corporate pie. When you buystocks, or shares, you own a slice of the company. Common Stock Preferred Stock •Owners share in •Dividend payment success when has priority over common company profits. stock dividends. •Owners at risk if •Dividends don’t increase company fails. if company prospers.
  13. 13. Bonds: Financing the Future Bonds are loans that investors make to corporations and governments. The borrowers get the cash they need while the lenders earn interest. Investors Corporate Bonds Willing to Lend Money U.S. Treasury BondsInvestor gets Municipal Bondspar value at maturity Bond Matures
  14. 14. Mutual Funds: Putting It Together A Mutual Fund is a collection of stocks, bonds, or other securities owned by a group of investors and managed by a professional investment company. How Mutual Funds Work? A large number of people with money to invest, buy shares in a mutual fund. Money Goes To The Their Pooled Money Has Fund Manager Invests the MoneyMutual Fund Company More Buying Power In a Collection of Stocks, Bonds or Other Securities
  15. 15. Strategy 6. Understand Inflation
  16. 16. Strategy 6. Understand Inflation
  17. 17. Summary• Time is on your side. The sooner you begin saving, the quicker you can make your dreams come true. No amount is too small to get started.• Consistency is the key to building your savings. What you save isnt as important as the need to regularly sock something away. Always pay yourself first. A good habit is to save at least 10 percent of everything you earn.• Dont put all your eggs in one basket. Think long term for your future goals--college, a home, retirement--and short term for other expenses. This way you wont be tempted to dip into your retirement fund for things like car repairs, clothes, or whatever else may come up.
  18. 18. It’s never too early to start!

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