Course is based on personal finance and investment opportunities for the middle class

1. 2 0 1 0 A m e r i c a n
I n s t i t u t e o f
Choosing
Investments for
your Portfolio

2. 2 0 1 0 A m e r i c a n
I n s t i t u t e o f
Speaker

3. Jeff Wilson II CPA, CGMA, CFE, AFC
Mr. Wilson is the President of The WII Group, LLC a “Cloud
Based” accounting firm, based in Clinton, MD.
He is a Certified Public Accountant (CPA), Accredited
Financial Counselor (AFC), and Chartered Global
Management Accountant (CGMA), and Certified Fraud
Examiner (CFE) in the State of Maryland. In addition, he is
an Advanced QuickBooks ProAdivsor.
He specializes in working with small to mid–size business
using QuickBooks Online and QuickBooks Desktop.
In addition to being a CPA, he spends his free time as an
advocate for financial literacy and personal money
management by teaching financial management for local
non-profits and churches in Southern Maryland.
Other Professional Accomplishments:
• 2006 Bowie State University Accounting Success Stories
• 2007 Black Enterprise Financial Fitness Winner
• 2013 American Institute of CPAs (AICPA) 2013 Leadership
Academy Graduate
The WII Group, LLC
President
www.wiicpas.com

4. Course Objective
 Describe the primary asset classes
 Review the risks associated with the primary asset
classes
 Define what a mutual fund is
 Describe the types of mutual funds
 Identify benefits and considerations associated with
investing in mutual funds
 Describe factors you should consider when selecting
investments for your 401(k)

5. There are a number of financial instruments that span the globe:
Stocks, Bonds, Options, and Future Markets.
These markets provide the framework for the U.S financial and
system and framework.
The “stock market” is where individuals and companies buy and
sell financials instruments.
Stocks are listed on the New York Stock Exchange (NYSE),
National Association of Securities Dealers Automated Quotation
System (NASDAQ), and American Stock Exchange (AMEX).
The Financial Markets

6. 2 0 1 0 A m e r i c a n
I n s t i t u t e o f
Stocks

7. Dow Jones Industrial
Average (DJIA)
Known to many as the “The Dow”
Is an index made up of 30 blue-chip
companies.
The Dow is an index that shows how
30 large publicly owned companies
based in the United States have
traded during a trading session.
Used to be heavily weighted or
understood to be manufacturing but
that is no longer the case.
Standard & Poor’s 500
Known to many as the S&P
The S&P 500 is a basket of 500
stocks considered to be widely held
and the 500 largest company by
Market Cap.
Represents the broad market better
than most indexes.
The Stock Index

8. Common Stock
1. Ordinary owner interest in a
company.
2. Entitles you to vote on issues
pertaining to the company.
3. Entitles you to the receipt of
dividend income if paid.
4. Last in line for the company's
assets during bankruptcy.
Preferred Stock
1. Preferred stockholders have a greater claim
to a company's assets and earnings (very
important if bankruptcy occurs).
2. When distributions are made, preferred
stockholders must be paid before common
stockholders.
3. The dividends of preferred stocks are
different from and generally greater than
those of common stock.
4. If the company must be liquidated in
bankruptcy and debtors must be paid first,
before preferred stock holders are paid.
5. Subsequently, and common stockholders will
not receive any money until after the
preferred shareholders are paid out.
Types of Stocks
Stocks represent an ownership interest in a company through equity.

9. Capital Appreciation
Capital appreciation is the increase in the
selling price (market price) of the stock.
Difference between your purchase price
and your sell prices.
Ex. Purchase 100 Shares of IBM for
$10/Share = $1,000 (cost).. One year
later you sale 100 shares for $12/share
for $1,200. The capital gain is $200.00
Making Money on Stocks
Dividend
A dividend is a periodic payment
(monthly, quarterly, annually) made by
a corporation to its shareholders.
Must be declared by the Board of
Directors of the company.
Some stocks pay dividend, some
don’t.
Dividends are taxable as income in
the year received, subject to
preferential tax treatment of 0% to
20% tax rates.

10. 2 0 1 0 A m e r i c a n
I n s t i t u t e o f
Cash and Cash
Equivalents

11. Cash and Cash Equivalents
Provide a stabilizing force to
the overall portfolio.
Generate a small level of
interest income.
Serves as a source of
available capital should the
portfolio need to be
rebalanced.
• U.S. Dollar
• Treasury Bills
• Money Market
Accounts
• Saving Accounts
• Certificates of
Deposits (CDs)
• Short-Term, highly
liquid

12. 2 0 1 0 A m e r i c a n
I n s t i t u t e o f
Fixed Income
Securities (Bonds)

13. The Bond Market
Bonds are financial instruments which allow investors
to loan the available funds to governments or
corporations in need of cash in return for a series of
fixed payments in the future.
Misconception : While bonds are typically a less risk
than stocks, this does not mean that bonds do not
have risk factors to consider. Risk areas include:
interest rates, debt rating, debtor classification.

14. Treasury Notes
1. Treasury Bills, Notes,
Bonds.
2. Considered to be the
least risky debt
instruments.
3. Used to finance the
operations of the U.S.
Government.
4. Interest is paid by the
U.S. Taxpayer.
Corporate Bonds
1. Bonds issued by corporations,
usually publicly traded to
provide working capital.
2. Typically include a greater
return and risk than Treasury
Notes.
3. In case of bankruptcy,
bondholders are 1st in line
during liquidation.
4. Can be extremely “high-yield”
bonds if you purchased a
distressed companies debt
(considered Junk-Bonds).
Types of Bonds
A bond is a debt investment in which an investor loans money to an entity (typically corporate or governmental) which
borrows the funds for a defined period of time at a variable or fixed interest rate. Bonds are used by companies,
municipalities, states and sovereign governments to raise money and finance a variety of projects and activities. Owners of
bonds are debtholders, or creditors, of the issuer.
Source: Investopedia.

15. 2 0 1 0 A m e r i c a n
I n s t i t u t e o f
Mutual Funds

16. Mutual Funds
A mutual fund is an investment company that pull the
money of many individual investors to invest in the
stock, bond, and cash markets.
Mutual funds are one of the best ways to invest in a
broad basket of securities. They help diversify your
investment portfolio/ This means that you’re spreading
your money out over many stocks or bonds and not
putting all of your eggs in one basket.
The portfolio of the mutual fund is managed by a
mutual fund manager.

17. 2 0 1 0 A m e r i c a n
Types of Mutual Funds
 Money market funds
 Fixed income funds
 Equity funds
 Hybrid funds

18. Index Funds
A Index Fund is a mutual fund that owns or attempts to
closely mirror the performance of a specific index.
Index Funds are typically less risk than actively
managed funds and their fees are lower.
Advisors and Brokers may not offer them as often
because they do not earn as mush commission on
these passively managed vehicles.6+
Examples of Index Funds are Vanguard 500 Fund
(VFINX),

19. Thing to Consider: Mutual Funds
 Investment objective
and strategy
 Sales charges
 Fees and expenses
 Risks
 Performance
information

20. Actively Managed
1. Attempt to have
greater returns than
the broad market
(S&P 500)
2. Have higher fees.
3. Have a greater risk for
decrease in Net Asset
Value (NAV)
Passive Management
1. Attempt to mirror the broad
market
2. Have lower fees due to less
activity
3. Typically lower in risk than a
Actively managed fund.
Types of Management
Portfolio managers typically take on 2 types of Investment strategies.
They are either actively managed of passively managed.
Traditionally, fewer than 20% of active mutual fund manager have been
able to outperform the market. (Everyone can’t be extraordinary)!!

21. 2 0 1 0 A m e r i c a n
I n s t i t u t e o f
Investment Strategy

22. Risk/Return Ladder
Risk
Return
 Money Market Fund
 Short-Term Bond Fund
 Municipal Bond Fund
 Intermediate-Term Government Bond Fund
 Long-Term Corporate Bond Fund
 Growth & Income Fund
 Equity-Income Fund
 International Equity Fund
 Small-Cap Stock Fund
 Aggressive Growth Fund
 Emerging Markets Fund

23. • Value
• Growth
• Income
Investment Style
When investing, you should consider your risk tolerance and the
investment style that matches your risk tolerance.

24. • Costs
• Investment Style
• Taxes
• Risk tolerance
• Investment objective
• Time horizon
• Asset allocation
• Conflicts of Interest
(Advisor Commissions)
Things to Consider
When inverting or discussing your future with your advisor you should
consider the following:
Traditionally, fewer than 20% of active mutual fund managers have been
able to outperform the market. (Everyone can’t be extraordinary)!!

25. The End