1. The Basics of Investing Stocks, Bonds & Cash Accounts

2. Types of Investments (4-Asset Classes) Stocks Real Estate Bonds Cash Accounts –Checking account, CD’s, money markets Average return per year 1926 - 2000

3. Holding Period When do you need your money back? –Time horizon determines which asset class you should invest in The longer the holding period----the more risk you should take! –Stocks = long term investment (5-years or longer) –Bonds = medium term investment ( 1-3 years) –Bank CD’s = short term investment (30 days to 2 years)

4. Asset Allocation Process of picking sectors to invest in BondsMoney Market Stocks A solid investment portfolio will place money in all 3

5. Opportunity Cost of Money You must earn more than the rate of inflation to raise wealth Currently between 1.5 – 2.5% $10,000 invested at 4% for 30-Years: $33,000 $10,000 invested at 15% for 30-years $875,000 The power of compound interest!

6. Bonds Bonds: are a loan to a Gov’t or business where you earn interest If the company goes bankrupt => you usually will not be paid back! Your Money U.S. Gov’t 5-Year Bond $1,000 You get 2% interest per year $20 per year Plus $1,000 in 5 years

7. Stocks Stocks investors become part owner of a company –A company issues stock to raise money to expand their business –Investment Banks help companies issue stock IPO = initial public offering –When a new company sells stock for the 1 st time

8. Recent IPO’s

9. The Power of Compounding Another powerful look at the power of compounding interest http://www.youtube.com/watch?v=eIOUGZcmauo

10. Key Stock Indices S&P 500 Index –Largest 500 companies by $ value Dow Jones –30 very large American companies Nasdaq –primarily technology stocks WHY INDICES: There are over 5,000 stocks! Indices give the average Performance of the overall market

11. 2 Goals of a Company 1) Maximize Profits (each year) 2) Grow Profits (over time) have the best stock performance Companies that grow PROFITS the fastest

12. COMPANY NAME 3M Co. Alcoa Inc. Altria Group Inc. American Express Co. American International Group Inc. AT&T Inc. Boeing Co. Caterpillar Inc. Citigroup Inc. Coca-Cola Co. E.I. DuPont de Nemours & Co. Exxon Mobil Corp. General Electric Co. General Motors Corp. Hewlett-Packard Co. Home Depot Inc. Honeywell International Inc. Intel Corp. International Business Machines Corp. Johnson & Johnson JPMorgan Chase & Co. McDonald's Corp. Merck & Co. Inc. Microsoft Corp. Pfizer Inc. Procter & Gamble Co. United Technologies Corp. Verizon Communications Inc. Wal-Mart Stores Inc. Walt Disney Co. Stocks in Dow Jones Index Stocks in Dow Jones Index

13. Sectors of Stock Market Technology Transportation Retail Financials Energy Health Care Defense New Industries (looking to the future…) Industry Type

14. BULL or BEAR MARKET?..

15. Recent Stock Market History Stock market hit a high in March of 2000 –3 years of negative returns followed [2000,2001,2002] 2003 SP500 +28.6% 2004 SP500+10.8% 2005 SP500+4.9% 2006 SP500+15.7% 2007 SP500+5.5% 2008-37.0% 2009 +26.0% 2010 +15.0% 2011+0.0 2012: +13.0% 2013: +29.6%!!

16. Building a $100,000 Portfolio How many shares? –Depends on how many dollars you want to invest –Do not choose based solely on price What types of companies? –Many sectors to choose from –Diversify, Diversify, diversify Do I spend all of my $100,000 –No more than $25,000 in one stock!