2. Getting started - Choosing a Broker Full Service Broker –ex. AG Edwards, Meryll Lynch, Edward D. Jones Gives advice, makes trades, account maintenance Discount Broker- –ex. Charles Schwab, Fidelity Brokerage Provides some advice, account maintenance Deep Discount Broker –ex. E-Trade No advice, order execution via email or phone

3. 5 steps to portfolio evaluation Assess your financial situation Define your goals Determine the amount of investment capital required to meet your goals Implement the changes necessary to achieve your objectives Monitor your portfolio

4. Reward/Risk Rule Bigger the reward - higher the risk Safer the money - less return

5. Mutual Funds Pooling the investments of many small investors and putting that money to work in a a variety of ways

6. Why mutual funds? Managed by professional money managers Diversifies investments Cost may be lower

7. Fundamentals of Mutual Fund Investing Talk to a professional Invest for the long term Invest on a regular basis Diversify- –Don’t put all your eggs in one basket

8. Dollar Cost Averaging Easiest/Safest method of investing Invest a fixed amount in the same investment Buy more shares when the price is low/fewer shares when price is high Reduces errors

9. Factors to consider Performance Liquidity Safety Minimum deposit Convenience Charges

10. Factors to consider cont. Other services Fund objectives Expenses –Sales load No load funds Front end load funds Back end load funds –Ongoing expenses Management fee Rule 12b-1 fee

11. Mutual Fund Mistakes Does not know how much of investment will go toward the selling commission Does not know how much money will be invested Does not keep close account of the monthly statement

12. Mutual Fund Checklist NOT guaranteed or insured AWLAYS carry investment risks Higher rate of return involves higher risk of loss Past performance not a reliable indicator of future performance all mutual funds have costs that lower investment returns Can buy some mutual funds directly

13. IRA’s Traditional IRA - tax deferred Roth IRA - tax free

14. IRA Contributions The 2001 Tax Law changed contribution amount