THE ROAD  TO FINANCIAL SUCCESS By Marion McHenry
PART 1:FINANCIAL INDEPENDENCE <ul><li>Provide for yourself </li></ul><ul><li>Do the things you want to do in life </li></u...
<ul><li>Start early </li></ul><ul><li>Use connections </li></ul><ul><li>Does it interest you? </li></ul><ul><li>Put your s...
PART 2:SAVING  & INVESTING  <ul><li>“ Success to me is having ten honeydew melons, and only eating the top half of each on...
<ul><li>THINK ABOUT: </li></ul><ul><li>10-15% of your annual salary  </li></ul><ul><li>Save before you spend </li></ul><ul...
Tips for Saving Money <ul><li>Don’t carry too much cash </li></ul><ul><li>Put 10-15% of salary directly into bank </li></u...
Investing: What is it? <ul><li>A way to make your money grow </li></ul><ul><li>Choice  to place money in a vehicle </li></...
Investing Your Money <ul><li>Money will grow over time </li></ul><ul><li>Finance your dreams </li></ul><ul><li>Enjoy retir...
More Tips on Investing… <ul><li>Have an investment strategy </li></ul><ul><li>Realize the risk </li></ul><ul><li>Be conser...
PART 3: DIFFERENT ASSET CLASSES <ul><li>Create a plan before you invest </li></ul><ul><li>Do the research </li></ul><ul><l...
STOCKS <ul><li>1.Expect volatility </li></ul><ul><li>2.Expect to lose money </li></ul><ul><li>3.Expect to wait </li></ul><...
BONDS <ul><li>Fixed income- “money now!” </li></ul><ul><li>Issuer holds debt </li></ul><ul><li>Usually pays interest (coup...
Mutual Funds <ul><li>Professionally managed investment scheme </li></ul><ul><li>Pools money from many investors </li></ul>...
PART 4: HOW DO I DO IT? <ul><li>How to invest in bonds, stocks and mutual funds </li></ul><ul><li>How to choose a bank </l...
How to Invest <ul><li>Stock </li></ul><ul><ul><li>Brokerage account: (Merrill Lynch, Schwab) </li></ul></ul><ul><ul><ul><l...
Choosing a Bank <ul><li>Don’t be gullible </li></ul><ul><li>Interest rates on different accounts </li></ul><ul><li>Fees an...
Different Kinds of Accounts <ul><li>Savings account </li></ul><ul><li>Checking account </li></ul><ul><li>Certificates of d...
Checking Account <ul><li>Don’t earn interest </li></ul><ul><li>Not for savings </li></ul><ul><li>Overdraft </li></ul><ul><...
Savings Account <ul><li>65% </li></ul><ul><li>Pay & earn interest </li></ul><ul><li>Not used as direct money </li></ul><ul...
Certificate of Deposit   <ul><li>Time deposit </li></ul><ul><li>Offered to consumers, banks and credit unions </li></ul><u...
MY CONCLUSIVE EQUATION <ul><li>Be financially independent </li></ul><ul><li>Save your money </li></ul><ul><ul><li>Watch it...
WORKS CITED <ul><li>Gardner, Tom and David.  The Motley Fool.   New York, </li></ul><ul><li>NY: Fireside, 2002. </li></ul>...
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The Road To Financial Success Marion

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What does a high school senior need to know before heading off to college? Marion has somesage tips.

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The Road To Financial Success Marion

  1. 1. THE ROAD TO FINANCIAL SUCCESS By Marion McHenry
  2. 2. PART 1:FINANCIAL INDEPENDENCE <ul><li>Provide for yourself </li></ul><ul><li>Do the things you want to do in life </li></ul><ul><li>Set financial goals </li></ul><ul><li>Prevent debt </li></ul><ul><li>Be responsible & reasonable </li></ul><ul><li>Look ahead </li></ul><ul><li>Do the math! </li></ul>“ I always knew I was going to be rich. I don't think I ever doubted it for a minute ” -Warren Buffet
  3. 3. <ul><li>Start early </li></ul><ul><li>Use connections </li></ul><ul><li>Does it interest you? </li></ul><ul><li>Put your skills to use </li></ul><ul><li>Work hard </li></ul><ul><li>Be professional </li></ul>
  4. 4. PART 2:SAVING & INVESTING <ul><li>“ Success to me is having ten honeydew melons, and only eating the top half of each one” </li></ul><ul><li>-Barbra Streisand </li></ul>“ Making money is a hobby that will complement any other hobbies you have, beautifully” -Scott Alexander
  5. 5. <ul><li>THINK ABOUT: </li></ul><ul><li>10-15% of your annual salary </li></ul><ul><li>Save before you spend </li></ul><ul><li>Spend less </li></ul><ul><li>Opportunity cost of purchases </li></ul><ul><li>Create a savings plan </li></ul><ul><li>Risk of inflation </li></ul><ul><li>Watch your money grow </li></ul><ul><li>Retire when you want to </li></ul><ul><li>Invest more </li></ul>
  6. 6. Tips for Saving Money <ul><li>Don’t carry too much cash </li></ul><ul><li>Put 10-15% of salary directly into bank </li></ul><ul><li>Think before you buy </li></ul><ul><li>Sell things </li></ul><ul><li>Bargain shopping </li></ul><ul><li>Avoid financial blunders </li></ul>
  7. 7. Investing: What is it? <ul><li>A way to make your money grow </li></ul><ul><li>Choice to place money in a vehicle </li></ul><ul><ul><li>Stocks, bonds, etc. </li></ul></ul><ul><li>Invest to make money </li></ul><ul><li>Buying securities from money markets, capital markets, liquid assets </li></ul><ul><li>Investment risk </li></ul>
  8. 8. Investing Your Money <ul><li>Money will grow over time </li></ul><ul><li>Finance your dreams </li></ul><ul><li>Enjoy retirement </li></ul><ul><li>THINK ABOUT… </li></ul><ul><li>How much to invest </li></ul><ul><li>How long you let your money grow </li></ul><ul><li>Interest and growth rates </li></ul><ul><li>Where to invest your money </li></ul><ul><li>Valuation </li></ul><ul><li>When to buy/sell </li></ul>
  9. 9. More Tips on Investing… <ul><li>Have an investment strategy </li></ul><ul><li>Realize the risk </li></ul><ul><li>Be conservative </li></ul><ul><li>Don’t invest only in big capital gains </li></ul><ul><li>Own something that has more money coming in than going out </li></ul><ul><li>Low-risk investments </li></ul><ul><li>Keep inflation and taxes in mind </li></ul><ul><li>Diversity among assets </li></ul><ul><li>Look for great bargains, they’re there </li></ul><ul><li>Start early </li></ul>
  10. 10. PART 3: DIFFERENT ASSET CLASSES <ul><li>Create a plan before you invest </li></ul><ul><li>Do the research </li></ul><ul><li>THINGS TO CONSIDER: </li></ul><ul><ul><li>Your time </li></ul></ul><ul><ul><li>The amount of money you have </li></ul></ul><ul><ul><li>How willing you are to take risks </li></ul></ul><ul><ul><li>How soon you need money </li></ul></ul><ul><ul><li>How long you are willing to invest </li></ul></ul>
  11. 11. STOCKS <ul><li>1.Expect volatility </li></ul><ul><li>2.Expect to lose money </li></ul><ul><li>3.Expect to wait </li></ul><ul><li>Growth-time to grow </li></ul><ul><li>A share of ownership in a company </li></ul><ul><li>Can buy/sell shares of public stock </li></ul><ul><li>Long term and short term stocks </li></ul><ul><li>9-11% annual return </li></ul><ul><li>Growth stocks </li></ul><ul><li>Dividend stocks </li></ul><ul><li>Growth and income </li></ul><ul><li>Be diverse </li></ul><ul><li>Balance sheet & income statement (p/e ratio) </li></ul>
  12. 12. BONDS <ul><li>Fixed income- “money now!” </li></ul><ul><li>Issuer holds debt </li></ul><ul><li>Usually pays interest (coupon) </li></ul><ul><li>Pay all back + interest on maturity date </li></ul><ul><li>Bond holder = lender </li></ul><ul><li>Issuer= borrower </li></ul><ul><li>Provide issuer with fast cash </li></ul><ul><ul><li>Finance long term investments </li></ul></ul><ul><li>Lender, not owner </li></ul><ul><li>Maturity date </li></ul><ul><ul><li>Consol bond-no maturity </li></ul></ul><ul><li>safe </li></ul><ul><ul><li>Fixed rate bonds </li></ul></ul><ul><ul><ul><li>Constant coupon </li></ul></ul></ul><ul><ul><li>Floating rate notes </li></ul></ul><ul><ul><ul><li>Changing coupon </li></ul></ul></ul><ul><ul><li>Zero coupon bonds </li></ul></ul><ul><ul><ul><li>No coupon </li></ul></ul></ul><ul><ul><li>Inflation linked bonds </li></ul></ul><ul><ul><li>Subordinated bonds </li></ul></ul><ul><ul><li>Perpetual bonds </li></ul></ul><ul><ul><ul><li>No maturity date </li></ul></ul></ul><ul><ul><li>Municipal bond </li></ul></ul><ul><ul><ul><li>Issued by government </li></ul></ul></ul><ul><ul><ul><li>Exempt from taxes </li></ul></ul></ul>
  13. 13. Mutual Funds <ul><li>Professionally managed investment scheme </li></ul><ul><li>Pools money from many investors </li></ul><ul><li>Puts money in stocks, bonds and other securities </li></ul><ul><li>Fund manager </li></ul><ul><li>Hundreds of sub-categories </li></ul><ul><li>Fees </li></ul><ul><ul><li>Service, management & investment </li></ul></ul><ul><li>Open-end fund </li></ul><ul><ul><li>Join and leave </li></ul></ul><ul><li>Exchange traded fund </li></ul><ul><ul><li>Mixture of mutual fund and closed-end fund </li></ul></ul><ul><li>Equity funds </li></ul><ul><li>Index funds </li></ul><ul><li>Bond funds </li></ul><ul><li>Money market funds </li></ul><ul><li>Low transaction costs </li></ul>
  14. 14. PART 4: HOW DO I DO IT? <ul><li>How to invest in bonds, stocks and mutual funds </li></ul><ul><li>How to choose a bank </li></ul><ul><li>How to pick the right bank account for you </li></ul>
  15. 15. How to Invest <ul><li>Stock </li></ul><ul><ul><li>Brokerage account: (Merrill Lynch, Schwab) </li></ul></ul><ul><ul><ul><li>Advice for extra $$$ </li></ul></ul></ul><ul><ul><li>Etrade </li></ul></ul><ul><li>Bond </li></ul><ul><ul><li>Public authorities, credit institutions, companies </li></ul></ul><ul><ul><ul><li>Underwriting: Buy a bunch of bonds and sell them </li></ul></ul></ul><ul><ul><ul><li>Bond issuers: (Morgan Keegan, Howard Weil) </li></ul></ul></ul><ul><li>Mutual Fund </li></ul><ul><ul><li>Brokerage account </li></ul></ul><ul><ul><ul><li>Specialize in mutual funds: (Fidelity, Vanguard) </li></ul></ul></ul>
  16. 16. Choosing a Bank <ul><li>Don’t be gullible </li></ul><ul><li>Interest rates on different accounts </li></ul><ul><li>Fees and restrictions </li></ul><ul><li>Negotiate </li></ul><ul><li>Differing regulations </li></ul><ul><li>Will the bank give you a loan? </li></ul><ul><li>Can you pay back the loan? </li></ul>
  17. 17. Different Kinds of Accounts <ul><li>Savings account </li></ul><ul><li>Checking account </li></ul><ul><li>Certificates of deposit </li></ul>
  18. 18. Checking Account <ul><li>Don’t earn interest </li></ul><ul><li>Not for savings </li></ul><ul><li>Overdraft </li></ul><ul><ul><li>protection </li></ul></ul><ul><li>No interest rates! </li></ul><ul><li>Frequent access to funds </li></ul><ul><li>Money available on demand </li></ul><ul><li>For convenience </li></ul><ul><li>Withdraw how much you wish, how often </li></ul><ul><li>Cash machines </li></ul><ul><li>Internet banking </li></ul><ul><li>Debit cards </li></ul>
  19. 19. Savings Account <ul><li>65% </li></ul><ul><li>Pay & earn interest </li></ul><ul><li>Not used as direct money </li></ul><ul><li>Set aside a portion of assets </li></ul><ul><li>Earn a return </li></ul><ul><li>Not as easily accessible </li></ul><ul><li>Government regulation </li></ul><ul><ul><li>Limits withdrawals, transfers, payments </li></ul></ul><ul><li>Pricy withdrawals </li></ul><ul><li>Don’t limit withdrawals </li></ul>
  20. 20. Certificate of Deposit <ul><li>Time deposit </li></ul><ul><li>Offered to consumers, banks and credit unions </li></ul><ul><li>Insured (risk free) </li></ul><ul><li>Specific, fixed term </li></ul><ul><ul><li>3 m, 6m, 1-5 y </li></ul></ul><ul><li>Fixed interest rate </li></ul><ul><li>Maturity date-get money and interest </li></ul><ul><li>Higher interest rates in exchange for keeping money in bank </li></ul><ul><li>More money and time=higher interest rate </li></ul><ul><li>Penalty for early withdrawal </li></ul>
  21. 21. MY CONCLUSIVE EQUATION <ul><li>Be financially independent </li></ul><ul><li>Save your money </li></ul><ul><ul><li>Watch it grow </li></ul></ul><ul><li>Invest your money </li></ul><ul><ul><li>Watch it grow </li></ul></ul><ul><li>Have a plan! </li></ul><ul><li>THIS EQUALS FINANCIAL SUCCESS </li></ul>
  22. 22. WORKS CITED <ul><li>Gardner, Tom and David. The Motley Fool. New York, </li></ul><ul><li>NY: Fireside, 2002. </li></ul><ul><li>Wikipedia contributors. “Bonds.” Wikipedia. 7 May </li></ul><ul><li>2009. http://en.wikipedia.org/w/index.php?title=Bond_(finance)&oldid=288302493 . </li></ul>

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