investment planning
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INVESTMENT GOALS
Home Ownership College Funding Retirement Planning
$2,500 Annual Investment
6% Return7 Years
$20,000Down Payment
$100 MonthlyInvestment
6% Return10 Years
$16,000For Tuition
$145 MonthlyInvestment
6% Return 25 Years
$100,000For Retirement
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YOURINVESTMENT GOALS
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1.1.
2.2.
3.3.
4.4.
3737INVESTMENT SPECTRUM
LOWER RISKLOWER POTENTIAL RETURN
HIGHER RISKHIGHER POTENTIAL RETURN
CASHEQUIVALENTS
FIXEDINTEREST
BONDS STOCKS
SOURCES OF RISK
InflationInflation
Interest rateInterest rate
EconomicEconomic
MarketMarket
SpecificSpecific
SAVINGS OPTIONS
CDS & SERIES EE SAVINGS BONDS
MONEY MARKET
FUNDS & ACCOUNTS
TAX-DEFERRED ALTERNATIVES
AnnuitiesAnnuities
ACCUMULATIONPHASE PAYOUT PHASE
VARIABLE ANNUITIES
STOCKS FIXED INTEREST
BONDS MONEY MARKET
ADVANTAGES OF TAX-DEFERRED GROWTH
$1,000 at 8% in 28% tax bracket
$1,000 at 8% tax deferred
Tax-deferred account after taxes
10 years 20 years 30 years 40 years
$1,751 $2,159$3,065
$4,661 $5,366
$10,063 $9,394
$21,725
$15,922
BONDS
VALUE OF
BOND INTEREST RATES
TYPES OF BONDS
TreasuryTreasury
MunicipalMunicipal
CorporateCorporate
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STOCKS
CAPITAL
CORPORATION
DIVIDENDS, CAPITAL GAINS
INVESTORS
HOW YOU CAN MAKEMONEY IN STOCKS
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1.1. DividendsDividends
2.2. Capital gainsCapital gains
MUTUAL FUNDS
Income-orientedIncome-oriented
Growth-orientedGrowth-oriented
ADVANTAGES OF MUTUAL FUNDS
1. 1. ConvenienceConvenience
2. 2. Professional managementProfessional management
3. 3. FlexibilityFlexibility
4. 4. DiversificationDiversification
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MUTUAL FUNDS CHECKLIST
ObjectivesObjectives
Past performancePast performance
Fees and expensesFees and expenses
TaxesTaxes
DIVERSIFICATION
DIVERSIFICATION
ValueTime
STOCK
BOND
DOLLAR COST AVERAGING
DOLLAR COST AVERAGING 4848
Month Investment Share Price Shares Bought
1
2
3
4
5
$100.00
$100.00
$100.00
$100.00
$100.00
$500.00
TotalInvestment
$ 10.00
$ 5.00
$ 2.50
$ 5.00
$ 10.00
$ 6.50
Average Price
10
20
40
20
10
100
TotalShares
COLLEGE INVESTMENT PLANNING
4949THE COST OF COLLEGE
Private Colleges $22,541
Public Colleges $8,470
Community Colleges* $1,705
*(tuition & fees only)
Source: The College Board, 2000
4949WHERE WILL THE MONEY COME FROM?
1.1.ScholarshipsScholarships
2.2.Financial aidFinancial aid
3.3. LoansLoans
4.4.Personal Personal accumulationaccumulation ?
SOURCES OF COLLEGE FUNDS
Academic andAcademic andathletic scholarshipsathletic scholarships
GrantsGrants
Work-study Work-study programsprograms
LoansLoans
PERSONAL ACCUMULATION
Stock and bond mutual fundsStock and bond mutual funds
Zero-coupon bondsZero-coupon bonds
Series EE SavingsSeries EE SavingsBondsBonds
Life insuranceLife insurance
Education IRAsEducation IRAs
Section 529 plansSection 529 plans
QUALIFYING FOR FINANCIAL AID
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COLLEGE FUNDING CALCULATOR
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Name & Age Current Estimated Futureof the Child College Cost x Cost Factor
Lisa 8 $8,500 8.734 =
Estimated Future Cost
$74,239
COLLEGE FUNDING CALCULATOR
5454
Estimated College Costs Savings Factor Annual Savingsin Future Dollars x (Table 2) = Required
$74,239 0.076 $5,642
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