Investment Planning

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

3636

YOURINVESTMENT GOALS

3636

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

4141

STOCKS

CAPITAL

CORPORATION

DIVIDENDS, CAPITAL GAINS

INVESTORS

HOW YOU CAN MAKEMONEY IN STOCKS

4242

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

4444

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

5252

COLLEGE FUNDING CALCULATOR

5454

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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