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Investing for Beginners

Investing for Beginners. Justin Gilly RVA Financial. Now vs Later. Jim invests $100 a month ($1,200/year) at age 25 for 10 years at 10.00% compounded monthly (compounding continues after age 35) Sam invests $100 a month ($1,200) at age 35 for 30 years at 10.00% compounded monthly

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Investing for Beginners

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  1. Investing for Beginners Justin Gilly RVA Financial

  2. Now vs Later • Jim invests $100 a month ($1,200/year) at age 25 for 10 years at 10.00% compounded monthly (compounding continues after age 35) • Sam invests $100 a month ($1,200) at age 35 for 30 years at 10.00% compounded monthly Who has more money at age 65?

  3. Time Is Money

  4. Dow Jones Industrial Average

  5. Retirement Social Sec. Personal Pension The 3 Legged Retirement Stool

  6. Where Can You Put Your Money? Debts (a good thing) • Savings • bank holds your money • CDs • bank holds your money, time specified • Money Market • short term • Bonds • “loan”, lower risk (usually)

  7. Where Can You Put your Money? Securities • Stocks • “ownership”, risk varies • Mutual Funds • “pool”, risk varies • ETF’s • “index”, risk varies

  8. What Programs are Available for Retirement Savings? • What are they, how do they work, and what are the underlying investments • Traditional IRA • Roth IRA • 403 (b) • 401 (k)

  9. IRA • After-Tax Investment up to $5,000/year • Account grows tax deferred • Taxes paid once distributions are taken • 10% IRS penalty assessed before age 59 1/2 • Must start distributions at age 70 1/2 • Equal distributions under Rule 72(t) • Some withdrawals allowed

  10. Roth IRA • Tax-free earnings and distributions after five years and age 59½ • Maximum annual contribution of up to $5,000 • Contributions permitted after age 70½ • Distributions not required after age 70½ • Penalty-free withdrawals prior to age 59½ under certain circumstances

  11. 403(b) • Schools, colleges, state agencies • Immediate vesting • 2009 max contribution $15500 • Portable

  12. 401(k) • Employer sponsored • Matching/vesting schedules • 2008 max contribution $15500 • Portable?

  13. How To Manage Risk • Consult an investment professional • Match your investments with your time frame • Pick funds managed by experienced professionals • Invest regularly - in good times and bad • Diversify!

  14. How Do Taxes Affect Investing? • Tax Deductible Investing options • Tax Deferred Investing options • Marginal Tax Brackets

  15. How To Get Started. • Talk to an advisor • Start doing research • Tips to help get started • Begin planning • 401(k) - go to employer • IRA - Bank/ mutual funds/ETFs • do own investments • T. Rowe Price, Vanguard, Fidelity, etc • use a financial advisor

  16. Start Now Where to Invest Retirement Diversify Retirement Taxes How to Get Started Advisor or Not Cost Wrap Up Summary Points

  17. Questions?

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