DIVISION OF FIRMS

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National Association of Black
Accountants, Inc.

M ney ense
Investing
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Investing
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What is investing?

• Money set aside for future income, benefit or
  profit to meet long term goals
  

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Saving and Investing The Difference

• Investing is earning a return on your money
• Saving is to put aside or reserve

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• Why Invest?

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Best Ways to Invest

• Get in the habit of saving. You must set aside a
  portion of your income as often as possible.
  
• Invest in financial markets so your money can
  grow at a meaningful rate.
  
• Ignore short-term price fluctuations, and focus
  on long-term potential.

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Best Ways to Invest

• Ask questions and become educated before making
  any investment.
  
• Invest with your head, not with your stomach or
  heart. Avoid the urge to invest based on how you
  feel about an investment.
  

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Before you Start

• Organize your finances
• Understand the impact of time

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Time Value of Money

• The relationship between time, money, and rate of
  return(interest), and their effect on earnings
  growth

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Time Value of Money

• Suppose your relative owed you 500. Would you
  rather have this money repaid to you right away,
  in one payment, or spread out over a year in four
  installment payments? Would it make a difference
  either way?
• You would probably be better off getting your
  money right away, in one payment. You could
  invest this money and earn interest on it or you
  could use this money to pay off all or part of a
  loan.

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Time Value of Money

• The time value of money refers to the fact that a
  dollar in hand today is worth more than a dollar
  promised at some future time.
  
• A dollar in hand today can be invested in an
  interest-bearing account that would grow in value
  over time.
  
• The trade-off between money now and money later
  depends on, among other things, the rate of
  interest you can earn by investing.

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Opportunity Cost

• Opportunity cost the cost of any decision
  includes the cost of the best forgone
  opportunity. 
  
• If you pay 50.00 for a concert ticket, your cost
  of attending the concert is not just the ticket
  price, but also the time and cost of what else
  you might have enjoyed doing instead of going to
  the concert.
• Applying this concept to the 500 owed to you,
  you see that getting the money in installments
  will saddle you with opportunity cost. By taking
  the money over time, you lose the interest on
  your investment or any other use for the initial
  500, such as spending it on something you would
  have enjoyed more.

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Key Investment Principles

• The power of compound interest
• Rule of 72
• 72/236
• 72/612
• 72/89

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• Activity

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Developing An Investment Strategy

• Purpose for Investment
• Retirement
• Education
• Wealth Accumulation
• Supplemental Income
• Investment Options
• Financial Advisors
• Measuring Effectiveness

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Investing for Wealth

• Planning for wealth
• Make the most of a 401(K)

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Investing in Your Future

•  Asset allocation is ongoing
• Diversification
•  Life circumstances
•  Investment goals, timeframe and tolerance

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Investing in Your Future

• Asset Allocation
• Stocks
• Bonds
• Cash Equivalents

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Investing in Your Future

• Long-Term Investments
• Mutual Funds
• Stock
• Bonds

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Investing in Your Future

• Retirement Specific Investments
• 401(k)
• IRA
• Social Security

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Monitoring Investments

• Set Attainable Goals and Objectives
• Periodically Assess
• Be Prepared to Change Course
• Do Not Procrastinate
• Seek Assistance

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Financial literacy isnt just a matter of
knowing what you have and knowing your options.
It is a matter of planning for lifes milestones.
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Thank You!

• National Association of Black Accountants, Inc.
• M ney ense
• For more information visit www.nabainc.org

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360 Degrees of Financial Literacy

• 360 Degrees of Financial Literacy is a national
  effort of the CPA profession to improve the
  financial understanding of Americans. It
  provides a comprehensive approach to financial
  education, focusing on the information Americans
  need at every life stage, from childhood to
  retirement. CPAs volunteer their time and
  expertise to educate members of their communities
  about financial issues.
• Visit www.360financialliteracy.org for tools to
  help you make sound financial decisions.