Saving Vs. Investing
•Your savings is what you put in an extremely safe and easy to get to place
–Saving money isn’t about making money, it’s about being safe
–Use savings for goals you want to accomplish in five years
•Your investments should be:
–Reasonably safe
–Make you an acceptable amount of interest over time
–Saving money isn’t about making money, it’s about being safe
–Use savings for goals you want to accomplish in five years
•Your investments should be:
–Reasonably safe
–Make you an acceptable amount of interest over time
Risk and Return
•Risk is the possibility that you could lose some or all of your money
•Return is the amount that you can expect your money to grow
•Investments that pay higher interest rates have higher risk associated with them
–Life insurance costs more if you smoke
–Risky drivers have higher insurance premiums
•Return is the amount that you can expect your money to grow
•Investments that pay higher interest rates have higher risk associated with them
–Life insurance costs more if you smoke
–Risky drivers have higher insurance premiums
Acceptable Risk
•Only YOU can answer what an acceptable risk is to you.
•How much money can you stomach losing? And for how long?
•Could you stand if your $10,000 investment drops to $7,500?
•What about if it stays at $9,999 for 3 years in a row? (No interest is being earned)
•Define your own tolerance, and find an investment to match
•How much money can you stomach losing? And for how long?
•Could you stand if your $10,000 investment drops to $7,500?
•What about if it stays at $9,999 for 3 years in a row? (No interest is being earned)
•Define your own tolerance, and find an investment to match
Retirement
•Most people wait too long to start saving for retirement
•Retirement should be your first investment goal
•401k – Employers will match your monthly investments – 100% return on your money
•If you take money out of your retirement fund early, there are huge penalties
–10% penalty
–25% in taxes
•Retirement should be your first investment goal
•401k – Employers will match your monthly investments – 100% return on your money
•If you take money out of your retirement fund early, there are huge penalties
–10% penalty
–25% in taxes