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1MKD-3358M-A-SL EXP 31 AUG 2021 © 2020 EDWARD D. JONES & CO, L.P. ALL RIGHTS RESERVED.
THE NUTS AND BOLTSStocks
3MKD-3358M-A-SL EXP 31 AUG 2021 © 2020 EDWARD D. JONES & CO, L.P. ALL RIGHTS RESERVED.
5 - ST E P P R O C E SS
®HOW CAN I STAY ON TRACK?
WHEREAM ITODAY?
WHEREWOULD ILIKE TO BE?
CANI GETTHERE?
HOWDO I GETTHERE?
MYFINANCIAL
NEEDS
5MKD-3358M-A-SL EXP 31 AUG 2021 © 2020 EDWARD D. JONES & CO, L.P. ALL RIGHTS RESERVED.
CO M M O N STO C K VS . P R E F E R R E D STO C K
Common Stock
Preferred Stock
Ownership stake in the company Yes Yes
Dividend payments
Dividend amount may fluctuate. Dividends can be suspended or
eliminated at any point without notice.
Dividend amount is fixed and is usually a percentage
of the stock’s par value. Dividends can be suspended or eliminated at any point
without notice.
Priority if the company goes bankrupt
Paid last in the event of bankruptcy or liquidation
Paid before common stockholders but after
creditors in the event of bankruptcy or liquidation
Voting rights One vote per share Few or no voting rights
6MKD-3358M-A-SL EXP 31 AUG 2021 © 2020 EDWARD D. JONES & CO, L.P. ALL RIGHTS RESERVED.
H OW STO C KS M A K E M O N E Y
• Capital appreciation
• Dividends - Dividend yield
7MKD-3358M-A-SL EXP 31 AUG 2021 © 2020 EDWARD D. JONES & CO, L.P. ALL RIGHTS RESERVED.
• Quality
• Diversification
• Long-term perspective
INVESTMENT STRATEGY
9MKD-3358M-A-SL EXP 31 AUG 2021 © 2020 EDWARD D. JONES & CO, L.P. ALL RIGHTS RESERVED.
S E L E C T I N G STO C KS : T H E P R O C E SS M AT T E R S
Stock Selection Process
Country
Longevity
Risk
Size
Analysis
Filter Stocks
65,000
18,000
9,000
8,000
750
10MKD-3358M-A-SL EXP 31 AUG 2021 © 2020 EDWARD D. JONES & CO, L.P. ALL RIGHTS RESERVED.
Diversification
11MKD-3358M-A-SL EXP 31 AUG 2021 © 2020 EDWARD D. JONES & CO, L.P. ALL RIGHTS RESERVED.
I N V E ST M E N T PY R A M I D
Aggressive
Growth
Growth & Income
Income
Cash
12MKD-3358M-A-SL EXP 31 AUG 2021 © 2020 EDWARD D. JONES & CO, L.P. ALL RIGHTS RESERVED.
D I V E R S I F I C AT I O N BY S E C TO R
Communication ServicesTelecom & Cable, Media, Internet
Consumer DiscretionaryConsumer Services, Home & Auto, Retail & Apparel
Consumer StaplesFood & Beverages, Household &Personal, Staples Retail, Tobacco
EnergyExploration & Production, IntegratedEnergy, Refiners, Services & Drillers
Financial ServicesBanking, Capital Markets, ConsumerFinance, Insurance, Real EstateInvestment Trusts (REITs)
UtilitiesDiversified, Electric, Natural Gas, Water
TechnologyHardware, Semiconductors,Software & Services
Materials
IndustrialsAerospace & Defense,Infrastructure, Transportation
Health CareBiopharmaceuticals, Health CareServices, Medical Technology & Equipment
10%
4%
10%
8%
3%14%15%
9%
2%
25%
Diversification does not guarantee a profit or protect against loss.
13MKD-3358M-A-SL EXP 31 AUG 2021 © 2020 EDWARD D. JONES & CO, L.P. ALL RIGHTS RESERVED.
D I V E R S I F I C AT I O N BY S E C TO R
Finding Sector Balance Defense
Communication Services Health Care
Consumer Discretionary Consumer Staples
Energy Utilities
Financials
Industrials
Materials
Technology
14MKD-3358M-A-SL EXP 31 AUG 2021 © 2020 EDWARD D. JONES & CO, L.P. ALL RIGHTS RESERVED.
DIVERSIFICATION BY COMPANY SIZE
• Large cap: Greater than $19.5 billion
• Mid cap: $3.3 billion to $19.5 billion
• Small cap: $500 million to $3.3 billion
• Micro cap: Less than $500 million
• Micro cap also includes stocks trading under $4/share
15MKD-3358M-A-SL EXP 31 AUG 2021 © 2020 EDWARD D. JONES & CO, L.P. ALL RIGHTS RESERVED.
D I V E R S I F I C AT I O N E XA M P L E
Technology stock declines
Consumer staples stock rises
Diversification does not guarantee a profit or protect against loss.
16MKD-3358M-A-SL EXP 31 AUG 2021 © 2020 EDWARD D. JONES & CO, L.P. ALL RIGHTS RESERVED.
D I V E R S I F I C AT I O N E XA M P L E
Stock D outperforming the rest
StockA
StockB
StockC
StockD
StockE
StockF
Diversification does not guarantee a profit or protect against loss.
17MKD-3358M-A-SL EXP 31 AUG 2021 © 2020 EDWARD D. JONES & CO, L.P. ALL RIGHTS RESERVED.
D I V E R S I F I C AT I O N E XA M P L E
StockA
StockB
StockC
StockD
StockE
StockF
Solutions
• Add funds
• Rebalance portfolio Rebalance
Add Funds
Diversification does not guarantee a profit or protect against loss.
18MKD-3358M-A-SL EXP 31 AUG 2021 © 2020 EDWARD D. JONES & CO, L.P. ALL RIGHTS RESERVED.
R I S I N G I N CO M E : CO M B AT I N G I N F L AT I O N
The inflation rate used to calculate 2044 prices is based on historical inflation rates from 1994-2019: Car = 1.3%; Gas = 3.2%; Groceries = 2.2%; Health care = 4.7%. Car: MSRP for automatic transmission Toyota Camry; Gas: National average for unleaded regular gasoline; Groceries: Family of two with moderate cost plan. Healthcare: 2017 data. Median household expenditure for married couple from Consumer Expenditure Survey.
Sources: Bureau of Labor Statistics; U.S. Department of Agriculture; AutoTrader.com.
1994 2019 2044 (est.)
Car $17,500 $24,100 $33,189
Tank of Gas (17 gallons) $18 $38 $85
Month of groceries $351 $612 $1,067
Annual health care expenses $2,376 $7,515 $23,769
19MKD-3358M-A-SL EXP 31 AUG 2021 © 2020 EDWARD D. JONES & CO, L.P. ALL RIGHTS RESERVED.
Long-term Perspective
20MKD-3358M-A-SL EXP 31 AUG 2021 © 2020 EDWARD D. JONES & CO, L.P. ALL RIGHTS RESERVED.
TIME IN THE MARKET IS BETTER THAN TIMING THE MARKET
Source: Ned Davis Research, Edward Jones calculations. 12/31/1979–10/02/2020. These calculations assume the best days, as defined as the top percentage gains for the S&P 500, including dividends, for the time period designated. These calculations do not include any commissions or transaction fees that an inves-tor may have incurred. If these fees were included, it would have a negative impact on the return. The S&P 500 is an unmanaged index and is not available for direct investment. Past performance is not a guarantee of future results. Dividends can be increased, decreased or eliminated at any point without notice.
Copyright © 2019 Ned Davis Research, Inc. All rights reserved. Further distribution prohibited without prior permission.
Buy andHold
Missed 10 Days
Value of a $10,000 investment in the S&P 500
(12/31/1979–10/02/2020)
Val
ue
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
$0
$883,952
11.62%Average Annual Return
$394,617
$229,0879.43%
$93,475
5.63%$63,129
4.62%
$700,000
7.98%$142,897
6.74%
Missed 20 Days
Missed 30 Days
Missed 40 Days
Missed 50 Days
$800,000
$900,000
21MKD-3358M-A-SL EXP 31 AUG 2021 © 2020 EDWARD D. JONES & CO, L.P. ALL RIGHTS RESERVED.
• 5-step Process
• Systematic Investing
DISCIPLINED APPROACH
22MKD-3358M-A-SL EXP 31 AUG 2021 © 2020 EDWARD D. JONES & CO, L.P. ALL RIGHTS RESERVED.
SYST E M AT I C I N V E ST I N G / D O L L A R CO ST AV E R AG I N G
Systematically Investing vs. Lump-sum Investment
Lump Sum – $5,000
02468
1012141618
202224
$26
Jan Apr May Jun Jul Aug Sep Dec
Shar
e P
rice
Average Price: $20/share
Total Purchased: 250 Shares
NovMarFeb Oct
Dollar Cost Averaging – $417/Month
02468
1012141618
202224
$26
Jan Apr May Jun Jul Aug Sep Dec
Shar
e P
rice
26 28
35 32
26 28
2119
24
1921
Number of Shares Purchased
Average Price: $17/share
Total Purchased: 300 Shares
21
NovMarFeb Oct
Source: Edward Jones. These charts are for illustrative purposes only and are not intended to represent the performance of any security. These illustrations do not include commissions or fees. Past performance does not guarantee future results.
Equity investments will fluctuate in value and, when sold, may be worth more or less than the original investment.
Systematic investing does not guarantee a profit or protect against loss. Such a strategy involves continual investment in securities regardless of fluctuating price levels of such securities. You should consider your financial ability to continue the purchases through periods of low price levels.
23MKD-3358M-A-SL EXP 31 AUG 2021 © 2020 EDWARD D. JONES & CO, L.P. ALL RIGHTS RESERVED.
• Mutual Funds
• ETFs
OTHER WAYS TO OWN STOCK
24MKD-3358M-A-SL EXP 31 AUG 2021 © 2020 EDWARD D. JONES & CO, L.P. ALL RIGHTS RESERVED.
PAS S I V E VS . AC T I V E : B E N E F I TS A N D T R A D E - O F F S
Passive Active
Benefits
• Likely to perform close to index
• Generally lower fees
• Typically more tax efficient
• Opportunity to outperform index
• Potential for limiting the downside
• Buy/sell decisions based on research
Trade-offs
• Unlikely to outperform index
• Participate in all of index downside
• Buy/sell decisions based on index, not research
• Potential to underperform index
• Generally higher fees
• Typically less tax efficient
25MKD-3358M-A-SL EXP 31 AUG 2021 © 2020 EDWARD D. JONES & CO, L.P. ALL RIGHTS RESERVED.
• Stock basics
• How to make money with stocks
- Dividends
- Capital appreciation
• Principles of Stock Investing
- Quality
- Diversification
- Long-term perspective
RECAP
Diversification does not guarantee a profit or protect against loss.
26MKD-3358M-A-SL EXP 31 AUG 2021 © 2020 EDWARD D. JONES & CO, L.P. ALL RIGHTS RESERVED.
&AnswersQuestions
27MKD-3358M-A-SL EXP 31 AUG 2021 © 2020 EDWARD D. JONES & CO, L.P. ALL RIGHTS RESERVED.
PLEASE COMPLETE YOUR EVALUATION NOW
Thank You
28MKD-3358M-A-SL EXP 31 AUG 2021 © 2020 EDWARD D. JONES & CO, L.P. ALL RIGHTS RESERVED.
I M P O R TA N T CO N S I D E R AT I O N S
The contents of this presentation are for informational purposes only. While the information is believed to be accurate, it is not guaranteed and is subject to change without notice.