YoungInvestors

1. YoungInvestors Investing 101

2. Introduction • Not a get rich quick scheme • Requires a lot of effort, but rewards can outweigh the effort • Should not let banks/bosses push your money around • No one knows what is best for you and your money than yourself

3. Agenda • What Is Investing • The Concept of Compounding • Knowing Yourself • Preparing For Contradictions • Types Of Investments • Portfolios and Diversification

4. What Is Investing? • Putting your money to work for you • Different types of “investment vehicles” • Investing is not gambling  calculated risk • Increase freedom, sense of security, and ability to afford things • It is a necessity. Need it to retire and maintain current lifestyle

5. Compounding • Compounding = process of generating earnings on an asset's reinvested earnings. • Re-investment of earnings and time • Interest earning interest on interest • Rate of return increases over the years

6. Knowing Yourself • Success in investing depends on ensuring your investment strategy fits your personal characteristics • Investment Objectives • Safety of capital • Current income • Capital appreciation - Age- Stage/position in life - Personal circumstances

7. Knowing Yourself • Personality • Amount of volatility you can stand to see in your investments • Desire to research investments • Risk tolerance determines what is best for an investor

8. Preparing for Contradictions • No indisputable laws • 2 opposite approaches may both work • There are no precise measurements • Economics and Finance are social sciences • Emotion involved • Not measureable like chemistry or physics • Unreliable and unpredictable • All experts have various theories on how the market works • Nothing more than opinions

9. Preparing for Contradictions • Example: Sally vs. John • Sally believes in: • Buying small companies and wait for them to grow exponentially • Looking for newest technology, innovations • Doesn’t care about current profits, believes in potential • John believes in: • Companies who have proven themselves • Have good track records, “safe” • Looking for mature companies which pay dividens Who is right?

10. Preparing for Contradictions • Answer: NEITHER • Both are very common investing strategies • Sally = growth investor, John = value investor • Any strategy depends on the type of investor  goals, characteristics, etc.

11. Types of Investments • Bonds • Lending money to a “debtor”, for a fixed interest • Safe, guaranteed return • Low return • Stocks • Buying a portion of the business • Entitles you to vote/receive dividends • Possible return by appreciation of stock, or dividends • Potentially more profitable, much more risky

12. Types of Investments • Mutual Funds • Collection of stocks and bonds • Pooling money with many other investors, managed by a professional portfolio manager • Less time/experience needed, potentially “safer”  in the hands of a professional investment manager, although not always true • Other Investments: • Options, Futures, Gold, Real-estate, FOREX • For experienced investors • Very high risk, high reward • Experts agree new investors should not dabble into these types of investments  build an investing foundation first

13. Portfolios and Diversification • A portfolio is a combination of different investment assets mixed and matched for the purpose of achieving an investor's goal. • Example of assets include; equities, fixed income securities, and cash and equivalents. • Two basic types of portfolios are conservative and moderately aggressive.

14. Portfolios and Diversification • Diversification prevents you from keeping “All your eggs in one basket” thus keeping you longer in the game.

15. Conclusion • There are many ways to invest successfully (various strategies) • Each investment vehicle has its own characteristics and is different from others (should examine them all to see which ones are good for you) • Each investor is different in terms of what they want to achieve and the risk they can tolerate (each requires a different strategy)

16. Conclusion • Diversifying is key to spreading out risk • Reinvesting your earnings allows you to compound • More than just knowledge, must practice these concepts to be successful • The kind of investing you want to do will affect the type of portfolio you choose to have

17. Examples • Cheap non-active investors might prefer to have an index fund (type of mutual fund) (passive) • Tries to ride with the market and its historic trend of increasing stock prices over time • More experienced investors who want to earn much and have to take on a lot of risk might choose to analyze the stocks themselves through much research (active) • Tries to purchase securities that will outperform the market

18. Overall Message • Save Money for Investing Regularly • Keep Investment Expenses Low • Invest for Long-Term • Learn as much as you can! • Knowledge will only make you better