Investing for Beginners

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Investing for Beginners

• Justin Gilly
• RVA Financial

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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?

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Time Is Money
4
Dow Jones Industrial Average
5
The 3 Legged Retirement Stool
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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)

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Where Can You Put your Money?

• Securities
• Stocks
• ownership, risk varies
• Mutual Funds
• pool, risk varies
• ETFs
• index, risk varies

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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)

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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

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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

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403(b)

• Schools, colleges, state agencies
• Immediate vesting
• 2009 max contribution 15500
• Portable

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401(k)

• Employer sponsored
• Matching/vesting schedules
• 2008 max contribution 15500
• Portable?

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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!

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How Do Taxes Affect Investing?

• Tax Deductible Investing options
• Tax Deferred Investing options
• Marginal Tax Brackets

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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

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Summary Points

• Start Now
• Where to Invest Retirement
• Diversify
• Retirement
• Taxes

• How to Get Started
• Advisor or Not
• Cost
• Wrap Up

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Questions?