cbcf financial literacy workshop ii: investing with little money › wp-content › uploads › 2019...
TRANSCRIPT
CBCF Financial Literacy Workshop II: Investing With Little Money
Friday, July 26, 2019
AGENDA
Ø Welcoming Remarks
Ø Introduction of Speakers
Ø Presentation: Investing With Little Money
Ø Audience Questions
THANK YOU TO OUR GENEROUS SPONSORS
Britepaths
Financial Empowerment Center at South County
Chick-fil-A (3100 14th Street NW)
Pepsi Cola
Bank of America
EDI Photography
CBCF Financial Literacy Workshop II: Investing With Little Money
Friday, July 26, 2019
SPEAKER
Ms. Naima Barnes is a volunteer Financial Coach with Britepaths Inc. at the Fairfax County Financial Empowerment Center. Ms. Barnes believes that financial planning and coaching should be accessible to everyone, and not just a specific group of people. By day, Naima is a Paraplanner for Motley Fool Wealth Management, which she joined in 2016 after working for various companies across the country, handling high net-worth and ultra-high net-worth clients. Naima, a New Jersey native, graduated from The Ohio State University with a Bachelors of Science in Consumer and Family Financial Services; and is currently a Certified Financial Planner Candidate. When she isn’t helping clients reach their financial and wealth-building goals, she is actively engaged in educating local youth on all aspects of financial literacy by leading the program for high school students through The Motley Fool’s education initiative, Fool School. In her spare time, Naima owns and operates Knits by Naima, a handcrafted knit and crochet accessories business.
For more information, visit: https://britepaths.org/
Investing With Little Money Presented by: Naima Barnes
Partnership with the CBCF, the Financial Empowerment Center and Britepaths
What is Investing? Investing is the act of allocating funds to an asset or committing capital to an endeavor (a business, project, real estate, etc.), with the expectation of generating an income or profit. (via Investopedia)
Being a Successful Investor Takes...
Rule of 72 Shows how quickly you can double your money The Magic of Compound Interest (aka Interest on Interest)
Initial investment = $1000
Rate of Return = 9%
Years until needed = 48
Will double every 8 years
6 times it will double until age 68
● Age 28 = $ 2,000 ● Age 36 = $ 4,000 ● Age 44 = $ 8,000 ● Age 52 = $16,000 ● Age 60 = $32,000 ● Age 68 = $64,000
Types of Investments
● Shares of ownership in a corporation and represents a claim on part of the corporation’s earnings and assets ○ Investing in stocks has the greatest potential for growth (capital
appreciation) over the long-term ● Stock prices will fluctuate daily, can be affected by
○ Factors inside the company ■ i.e. A recall, poor earnings, news story
○ Events the company has no control over ■ i.e. Political or market events
● Investors run the risk of losing money ○ If company fails or sells shares for less than they brought them for
Stocks
Bonds A debt security, similar to an IOU. ● Borrowers issue bonds to raise money, the investor buys bonds and is
lending money to the issuer ○ Issuers are the US government, municipalities (state, local, and their
agencies) or corporations The issuer pays the lender (buyer of bond) a specified rate of interest (coupon) during the life of the bond and to repay the principal (face value or par value) of the bond, when it "matures," or comes due after a set period of time. Bonds help to diversify an investment portfolio and control risk
Mutual Funds / Exchange Traded Funds (ETFs)
● A basket of different securities (stocks, bonds, real estate) managed by money managers ● Great way to get exposure to a lot of different securities at a lower cost because they
allocate a portion of each security inside of the fund ● Mutual funds trade at the end of the day vs. ETFs that trade similar to stock (the value goes
up and down during the day) ● ETFs are usually cheaper than Mutual Funds
○ Be sure to look at the Fees (expense ratio) ● Index Funds are a great way to get exposure to an entire index at a lower cost
○ Vanguard, Charles Schwab, iShares, Fidelity
Alternatives Private Companies - Companies that are on available on the stock market
● WeWork, Hulu or your friend’s startup
Cryptocurrency - Bitcoin, Libra, Litecoin or in Blockchain Technology
Gold / Silver - Either in bars or shares of gold/silver
Art - Basquiat
Real Estate / Real Estate Investment Trusts (REITs) ● Can invest directly in real estate by purchasing property or through a Real
Estate Investment Trust (REIT) ● A great way to diversify your portfolio or add a stream of income but shouldn’t
be your primary way of investing
Constructing Your Portfolio
Define Your Goals ● Create goals that are SMART (Specific, Measurable, Attainable, Relevant,
Time-Bound) ○ Example - I am going to save $100 per month over the next year into my savings for my trip to
Cartagena, Colombia
● Set up a recurring contribution to your accounts based upon how much you can contribute ○ Create the habit of regular investing and over time you can increase your contributions
● Investing is not a way to “Get Rich Quick”, you want to invest money that you will not need for at least 3-5 years
Why Investing Isn’t a Way to Get Rich Quick
Now That You Have Your Goal, Where Does it Go? Investing for Retirement?
● 401(k) ● 403(b) ● TSP ● IRA (Traditional or Roth)
Investing for the Shorter Term or a Major Purchase?
● Cash/Taxable Accounts
Investing for Education?
● 529 Account
A Bit About Risk Tolerance ● Your comfort level to handle the changes in value of your investments ● Generally the greater risk you are willing to take on (in the longer term) , the
higher the returns you will see on your investments ● Adjust level of risk based on when you need to have access to the
investment ● Risk Tolerance Questionnaire via Vanguard -
https://personal.vanguard.com/us/FundsInvQuestionnaire
What is Diversification & Why is it Important? ● Helpsyoureduceyourriskby
spreadingthemoneyyouhavetoinvestdifferenttypesofinvestments
● Averagesoutthehighsandlowsoftheinvestments
● Maynotseeashighareturnifinvestinasingleinvestmentbutlowerstheriskofseeinganegativereturn
Do Your Research Morningstar - http://morningstar.com
Kiplinger's Mutual Fund Finder- http://www.kiplinger.com/tool/investing/T041-S001-mutual-fund-finder/index.php Google Finance - http://google.com/finance
Yahoo Stock Screener - http://finance.yahoo.com/screener/new
The Motley Fool - http://fool.com
How to Decide What Stock to Invest In How does this company make money?
What do I think about the products/services they provide?
Would I be proud to be a part owner of this company? Who is their competition? And who has the advantage? Do I think this company will be even more popular in 5 years?
They sell coffee and food at 25,000 locations around the world
It’s a dependable place to get coffee or treat myself now and then. Abit. But I’d rather hear what YOU think.... Dunkin Donuts, McDonalds, the office coffee pot. If the company is able to become the 3rd place beyond coffee (such as for meals, then yes!)
Let’s Go Shopping!
How to Choose an Online Broker ● Is their platform beginner friendly
● What is the cost for trading securities? ○ Some companies offer free trading
● What is the account minimum?
● Are there any account fees (maintenance fees)?
DIY or Nah ● Robo-advisors allow you to have a
diversified portfolio based upon your risk through an algorithm
● Low cost way to obtain investment management ○ Most companies 0.25%-0.89% ○ Fees are paid directly from the account
they manage (AUM
Investing on your Phone!
Additional Resources Blogs & Websites
● The Motley Fool ● Money Under 30 ● Rockstar Finance ● Making Sense of Cents ● A Wealth of Common Sense ● Financial Samurai ● Get Rich Slowly ● Journey to Launch
Podcasts
● Motley Fool Money ● So Money ● Stacking Benjamins ● Popcorn Finance ● Planet Money ● Paychecks & Balances ● His & Hers Money Podcast ● Journey to Launch
Books
● The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel - Benjamin Graham
● The Early Investor: How Teens & Young Adults Can Become Wealthy - Michael W Zisa
● How to Turn $100 into $1,000,000: Earn! Save! Invest! - James McKenna
● You are a Badass at Making Money: Master the Mindset of Wealth - Jen Sincero
● The Millionaire Next Door - William Danko ● Clever Girl Finance: Ditch Debt, Save Money
and Build Real Wealth - Bola Sokunbi ● Broke Millennial Takes On Investing: A
Beginner's Guide to Leveling Up Your Money - Erin Lowry
Remember ● Time is on your side, so why not start today ● Diversification is key, don’t keep all of your eggs in one basket ● You don’t need a lot of money to invest, start small but make regular
contributions ● Get that employer match! ● Index Funds are a great way to get exposure to a lot of companies for a small
amount of money ● Anyone and I mean ANYONE can be an investor
Questions