the startup guide - money

7/28/2019 The Startup Guide - Money

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CEO of Connect.com

Startup Guide RYAN ALLIS

Building a Better World Through Entrepreneurship

With Ellen Daly

The

2013 Edition

More slides at www.s


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SECTION 6

Money


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THIS presentation IS PART OF A LARGER slide DECK on

building a better world through entrepreneursh

Startupguide.com

ABOUT THIS PRESENTATION

For more slides & CONTENT visit:

MONEY


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MONEY IS A REALLYIMPORTANT TOPIC

TO UNDERSTAND

money Key lessons


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MONEY IS SIMPLYA STORE OF VALUE

WHICH ENABLESTWO PARTIES TO EXCHANGE

EVEN IF they cannot barter

money Key lessons



HERE ARE THREEKEY LESSONS

ABOUT MONEY

money Key lessons



SPEND LESS MONEYTHAN YOUR EARN

EVERY MONTH

money Key lessons



NEVER GO INTO DEBTFOR SOMETHING THAT

YOU DO NOT NEED

money Key lessons



SAVE UP EARLY IN LIFEAS the law of compoundINTEREST HELPS A LOT

OVER TIME

money Key lessons



HERE ARE FIVE KEYSTO BUILDING

WEALTH

money Five Keys to wealth



PAY OFF DEBT1

money The secrets to wealth

money s c s o



BUILD UP SAVINGS2





INVEST IN CASHPRODUCING ASSETS

3

Savings Accounts LendingClub Notes

Certificates of Deposit PRIVATE COMPANY STOCK

Treasury Bonds PUBLIC COMPANY STOCK

Municipal Bonds VENTURE FUNDS

Corporate Bonds HEDGE FUNDS

3





THEN USE THE CASHFLOW FROM YOUR

INVESTMENTS TO MAKE

MORE INVESTMENTS

4




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earn equity in

companies you workfor or start

5




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CONTINUE THIS CYCLE

For 40 years

6


money The secret to wealth in REVIEW


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1. PAY OFF DEBT2. BUILD UP SAVINGS3. INVEST IN CASH PRODUCING ASSETS4. THEN USE THE CASH FLOW TO INVEST IN MORE CASH

PRODUCING ASSETS

5. EARN EQUITY IN COMPANIES YOU WORK FOR OR START6. THEN CONTINUE THIS CYCLE OVER AND OVER

money The secret to wealth in REVIEW

money The middle class vs the rich


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Individuals in the middle class accumulate more debt as they be

more successful. A pay raise qualifies them to borrow more monefrom the bank so they can buy personal items like bigger cars,

vacation homes, boats, and motor homes. Their wage income comes

and is spent on current expenses and ONLY then on paying off thei

personal debt. SO As their income increases, so does their persona

debt. This is what we call the rat race.

- Robert kiy

money The middle class vs. the rich

money The middle class vs the rich


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The rich have their assets work for them. They

have gained control over their expenses (by savingand investing money each month) and focus on

acquiring or building assets. Their businesses pay

more of their expenses, and they have few, if any,personal liabilities.

- Robert kiyosaki

money The middle class vs. the rich

money Key lessons


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IF YOU SAVE UP & INVESTHERE IS WHAT YOU CAN

EXPECT TO HAVE

money Key lessons

money What you can expect to retire with


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MonthlySAVINGS 20 Yrs 25 Yrs 30 Yrs 35 Yrs 40 Yrs 45 Yrs 50$1,000 $0.52M $0.81M $1.22M $1.81M $2.64M $3.82M $5

$2,000 $1.05M $1.63M $2.45M $3.63M $5.29M $7.65M $10$3,000 $1.57M $2.44M $3.68M $5.44M $7.94M $11.47M $16$4,000 $2.09M $3.26M $4.91M $7.25M $10.58M $15.29M $21

WHAT YouLL HAVE IF YOU SAVE & INVEST

ASSUMES 7% AFTER INFLATION ANNUAL RETURN FROM INVESTING | ADD ADDITIONAL TIME TO PAY OFF ANY CURRENT DEBT

money What you can expect to retire with

money Two types of investments


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THERE ARE TWO TYPESOF INVESMENTS

DEBT & EQUITY




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DEBT INVESTMENTSARE LOANsIN WHICH YOU EARN A FIXED

INTEREST RATE RETURN




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EQUITY INVOLVESINVESTMENTS in EXCHANGEFOR PARTIAL OWNERSHIP

IN A COMPANY




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WITH EQUITY YOU MAKEMONEY WHEN THE VALUE

OF THE COMPANY GOES UP


money types of investments


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DEBT EQUITYMutual FundsIndex Funds/ETFS

Small Cap Stocks

MID CAP STOCKS

LARGE CAP STOCKS

VALUE STOCKSGROWTH STOCKS

Emerging Market Stocks

options

VENTURE FUNDS

HEDGE FUNDSPRIVATE COMPANIES

Savings AccountsTreasury Bonds

Municipal Bonds

Corporate Bonds

P2p LENDING

money types of investments

money Average returns


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HERE IS A SIMPLIFIED EXAMPLEOF HOW YOU CAN HAVE

$1M in 30 years


money To have $1m in 30 years


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To have $1m in 30 yearsSAVE $1k every month

AND INVEST IT




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To have $1m in 20 yearsSAVE $2k every month

AND INVEST IT


Two ways TO BECOME FINANCIALLY WEALTHYmoney


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THERE ARE TWO MAIN WAYS TO BECOME

A MILLIONAIRE

1) Build a business

2) Save & Invest wisely for 30 years

money Two ways TO BECOME FINANCIALLY WEALTHY


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If entrepreneurship isnt for you

Heres how to become a millionaire Automatically

1. Save $1000 per month2. Invest it at a 7% after inflationreturn3. Dont take any out for 30 years

money ANNUAL RETURNS OF INVESTED CAPITAL


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BUT HOW CAN YOU MAXIMIZE YOURCHANCES OF EARNING a 7%

AFTER INFLATION RETURN?



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HERE IS A TABLE OFAVERAGE YEARLY RETURNS BY

TYPE OF INVESTMENT

money HISTORICAL RETURNS


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OF COURSE PAST RETURNSArent ensured in the futur

But they are STILL HELPFUL

money Table of average returns after inflation


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Investment Type Approx.. Avg. Annual ReturnAfter Inflatio

(-2.8%)

Savings Accounts 0.10% -2.70%

Certificates of Deposit 1.70% -1%

Treasury Bonds 2.50% -0.30%

Municipal Bonds 4.50% 1.70%

Corporate Bonds 6% 3.20%LendingClub A-C Notes 8% 5.20%

S&P 500 Index Fund 10.60% 7.80%

Dow Jones Index Fund 11.10% 8.30%

LendingClub D-F Notes 12.10% 8.90%

money How to invest


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ONE INTERESTING NEWINVESTMENT OPTION ISPURCHASING

LENDINGCLUB NOTES

money Price to earnings ratio


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ONE KEY METRIC TO LOOK ATWHEN INVESTING IN A PUBLICCOMPANY IS THE

PRICE TO EARNINGS RATIO

money PE RATIOS


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I AVOID INVESTING IN BUSINESSES WITH

PE RATIOS ABOVE 30AND LOOK INTENTLY AT INVESTING IN

BUSINESSES WITH PE RATIOS

BELOW 15

money CASHFLOWS


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THE BEST WAY TO DETERMINE THETRUE VALUE OF A PUBLIC COMPANY IS

TO CREATE A DISCOUNTED CASH FLOW (DC

FORECAST

money Buffets margin of safety


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BUFFETs investing method

INVOLVES UNDERSTANDING A FIRM WELLCALCULATING WHAT HE BELIEVEs

THE fiRM IS ACTUALLY WORTHTHEN PURCHASING SHARES WHEN

Enough of a margin of safety exists

money CASHFLOWS


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WARREN BUFFET IN ESSENCE

CREATES DCF MODELS ON EACH COMPANY

HE INVESTS IN AND ENSURES THERES A

BIG MARGIN OF SAFETy BETWEEN WHAT HTHINKS THE FIRM IS WORTH AND WHAT

THE MARKET THINKS THE FIRM IS WORTH

money Portfolio theory


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PORTFOLIO THEORY STATESTHAT FOR THE AVERAGE INVESTORRETURNS ARE MAXIMIZED BY

DIVERSIFYING YOUR INVESTMENTSAND INCLUDING LOW CORRELATING

ASSET CLASSES

money Portfolio theory


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BUT IN PRACTICE THE HIGHEST RETURNSARE SEEN WHEN YOU INVEST

IN JUST A FEW ASSETS YOUUNDERSTAND VERY WELL

money Summary of money section


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YOU CAN BECOME WEALTHY OVER TIME BY

PAYING OFF DEBT SAVING INVESTing USING PROCEEDS FROM INVESTING TO INVEST MORE AND NOT GOING into debt FOR UNNEEDED THINGS

money Summary of money section


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THERE ARE TWO SEGMENTS OF PEOPLE IN THE WORLD

WHICH SEGMENT ARE YOU IN?

PEOPLE WHO PAY INTEREST ON LOANS AND WORK AT

COMPANIES

PEOPLE WHO RECEIVE INTEREST ON LOANS and own PARTS

companies

1

2

The


46/46

CEO of Connect.com

Startup Guide RYAN ALLIS

Building a Better World Through Entrepreneurship

With Ellen Daly

2013 Edition

More slides at www.s

the startup guide - money

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