For educational and informational purposes only. LFD Agenda items Types of common investments Cash Cash equivalents (CDs, Treasury bills) Bonds Stocks Mutual funds Retirement accounts

For educational and informational purposes only. Types of investments Cash Checking account Savings account

For educational and informational purposes only. “The most powerful force in the universe is compound interest.” —Albert Einstein

For educational and informational purposes only. LFD Types of investments Cash Simple interest vs. compound interest Which would you rather choose? For illustrative purposes only and is not indicative of any particular investment or performance. Investment$1,000 Time20 years Interest rate7% Simple interest account$2, after 20 years Compound interest account$3, after 20 years

For educational and informational purposes only. AMOUNT = P (1 + R/100)N AMOUNT = P (1 + R/4)4N FIND THE COMPOUND INTEREST ON USD AT 20% PERCENT INTEREST RATE PER YEAR FOR 8 MONTHS, COMPOUNDED QUARTERLY. Word Problems

For educational and informational purposes only. AN AMOUNT OF $1, IS DEPOSITED IN A BANK PAYING AN ANNUAL INTEREST RATE OF 4.3%, COMPOUNDED QUARTERLY. WHAT IS THE BALANCE AFTER 6 YEARS? Word Problems

For educational and informational purposes only. LFD Types of investments Cash equivalents Certificates of deposit Treasury bills Money market accounts

For educational and informational purposes only. Quiz Time!!!! Joanne invests $3000 at 5% that compounds annually for 10 years. How much does she have after 5 years? Teddy initially invests $12000 at 10% that compunds annually for 8 years. He decides to invest an additional 1000 after year 5. How much does he have after 8 years? LFD

For educational and informational purposes only. LFD Types of investments Bonds Corporate bonds A corporate bond is taxed at the local, state, and federal level. These bonds are riskier because they rely on the performance of the company. Municipal bonds A municipal bond is exempt from federal taxes. Government bonds A government bond is exempt from state and local taxes. Municipal and government bonds are considered to be less risky than corporate bonds because they are backed by the full faith and credit of the government.

For educational and informational purposes only. LFD Types of investments Stocks Stocks are basically the opposite of bonds. If bonds make you the creditor of a company, then stocks make you part-owner of a company. So imagine you own part of the grocery on the corner. If the grocery makes money, then you make money. If the grocery loses money, then you lose money. Stocks can be very volatile which will affect the value of your investment..

For educational and informational purposes only. LFD Types of investments Mutual funds

For educational and informational purposes only. Agenda items Risks of investing Investment risk Market risk Liquidity risk Interest rate risk Credit risk Inflation risk

For educational and informational purposes only. LFD Risks of investing Investment risk The risk of losing our invested money. All investments carry this risk.

For educational and informational purposes only. LFD Risks of investing Liquidity risk

For educational and informational purposes only. LFD Risks of investing Credit risk

For educational and informational purposes only. LFD Risks of investing Inflation risk If over 30 years, the value of $1 decreases by 3% per year* *The average rate of inflation is 3% over the past 20 years. Inflation is represented by the Consumer Price Index. $1.50 $3.00 $7.28 $8.00 $19.42 Current average cost Projected cost

For educational and informational purposes only. LFD Agenda items Simple ways to minimize risk Diversification Asset allocation Rebalancing *These concepts do not assure a profit or protect against an investment loss.

For educational and informational purposes only. LFD Simple ways to minimize risk Diversification *Diversification does not assure a profit or protect against an investment loss.

For educational and informational purposes only. LFD Simple ways to minimize risk Asset allocation *Asset Allocation does not assure a profit or protect against an investment loss. Younger investor Older investor These examples are for illustrative, educational, and informational purposes only. 80% 50% 40% 20% 40% 10%

For educational and informational purposes only. LFD Simple ways to minimize risk Rebalancing *Rebalancing does not assure a profit or protect against an investment loss after one year rebalanced

For educational and informational purposes only. LFD Putting your knowledge to use Jonah’s concerns: losing the money he had saved not having money for a “rainy day” Jonah’s investments: savings account -he used the savings account to accumulate his money Treasury bill -he invested his money in a T-bill because they are low risk low risk mutual fund -he used the mutual fund to help grow his money

For educational and informational purposes only. LFD Only the beginning It starts with you!

For educational and informational purposes only. LFD Thank you Questions? Neither Lincoln nor its representatives provide legal or tax advice. You should contact your tax advisor or attorney regarding your particular situation. Securities and investment advisory services distributed by Lincoln Financial Distributors, Inc., a broker/dealer and registered investment advisor. Insurance products are issued by Lincoln affiliates. Lincoln Financial Group is the marketing name for Lincoln National Corporation and its affiliates.