1. The document lists the 10 richest people in the world according to Forbes magazine in 2012, led by Carlos Slim Helú of Mexico with $69 billion. 2. It then discusses various investment and retirement options such as savings accounts, bonds, mutual funds, traditional and Roth IRAs, 401k plans, real estate, stocks, and international markets. 3. Key factors to consider with investments include liquidity, risk, and diversification. More liquid assets like savings accounts have lower risk and returns while less liquid assets like real estate and pensions have higher risk but potential for higher returns.

1. Bellringer
You don’t have to write
this down:
1. How old will you be
in 2061?
2. Do you think
$13/hour is a lot of
money?
3. Get out your notes

2. 10 richest people in the World
Forbes (2012)
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Carlos Slim Helú $69 B
Bill Gates
Warren Buffett
Bernard Arnault
Amancio Ortega
Larry Ellison
2, 3, 6
Eike Batista
Stefan Persson
Li Ka-shing
Karl Albrecht
8
1
4
5
9
7
10

8. Credit Cards
• Loan from the
bank
• High interest
rates
• Keep control
• Bankruptcy
• Video clip

10. Chances are….
Only 3% of the US earns
over $250,000/year
You will work
You will have a limited
supply of wealth
You will need to think
about your income and
make good choices
You need a budget
You need to think about
investing

11. Do you want to be?
• Rich & Retired
Social Security

12. Specifics about investing
• Opportunity cost of
investing?
• Things to consider:
– Liquidity
– Risk
– Diversify

13. Liquidity
• “How easy is it to turn this investment into
cash”?

15. Cash under mattress
•
•
•
•
Bad idea, why?
No return, risky
100% liquid
Inflation, you will
lose the inflation
rate

16. Savings Account
• Low interest rate
• No risk in USA
• Today: 1%, yuck! Money Market Acct 3-3.5 %

17. Pension Plan
• Employee plan
• Usually union or large
firm
• For example: 10% from
State employees, 80% of
salary when you
retire, after 30+ years
• Not liquid at all
• Low risk, long term

18. Bonds
• Issued by
government or
large corporation
• Low risk, low
return
• Must wait for
maturity
• Can be traded
(liquidity!!)
• WW1 & WW2 War
Bonds

19. Mutual Funds
• Managed stocks
• Lower risk, lower
control
• Some sort of
theme
• Saves you time

20. Traditional IRA
• Individual Retirement
Account
• You have to set it up
• You can deposit up
to $5000 per year
• (into mutual funds,
stocks or bonds)
• Tax loopholes
(breaks)
• Can’t touch until 60
• Not liquid
At 10% interest, a $5000 IRA
becomes $226,000 over 40 years!
$10,000 is over $400,000!

21. Roth IRA
• Individual Retirement
Account
• You have to set it up
• You can deposit up
to $5000 per year
• (into mutual funds,
stocks or bonds)
• No tax break, but tax
free when you retire
• Can’t touch until 60
• Not liquid
At 10% interest, a $5000 IRA
becomes $226,000 over 40 years!
$10,000 is over $400,000!

22. 401 K Plan
• Set up by employer
• Payroll deduction
• Invested into stock
market
• Lowers tax incidence
• Tax break for
employee
• Employee match
• Not liquid

23. Investment calculator

24. Real Estate
•
•
•
•
Risky, high capital
Relatively liquid
Speculation
Average real estate in
Tucson in 1970
$23,000
• Average real estate in
Tucson in 2008
$161,000!!!

25. International Markets
• Invest in
foreign
markets
• Invest in
currency
• Can be very
risky
• George
Soros

26. List by liquidity
•
•
•
•
•
•
•
•
•
Traditional IRA
Roth IRA
401 K
Real Estate
Stocks
Mutual Funds
Int’l currency
Pension plan
bonds

27. List by risk
•
•
•
•
•
•
•
•
•
Traditional IRA
Roth IRA
401 K
Real Estate
Stocks
Mutual Funds
Int’l currency
Pension plan
bonds

28. Finance Closure on your BR
401K plan
2
2
Trad. IRA
1
2
Roth IRA