Financial Literacy Begins with You!

Kathy FloydOffice of Investor Education and Advocacy

Louisiana Youth Financial Educators’ SummitSeptember 28, 2010

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SEC Disclaimer

The Securities and Exchange Commission, as a matter of policy, disclaims responsibility for any private publication or statement by any of its employees. The views expressed in this presentation do not necessarily reflect the views of the SEC, its Commissioners, or other members of the SEC’s staff.

Five Key Messages for Students

Manage your Wealth Set a Financial Goal Over the long-run, Stocks Diversification Compound Interest

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Students should know:

They are responsible for accumulating and managing

their own wealth

Financial Goals

Set a Financial Goal

Short Term, Medium Term, Long TermUnderstand Your Risk Tolerance

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Rates of Return

– Treasury Bills 3.7%– Long-Term Treasuries 5.4%– Long-Term Corp. Bonds 5.7%– Large Co. Stocks 9.6%– Small Co. Stocks 11.7%

Compound Annual Rates of Return* 1926 – 2008* Nominal

Diversification

Certificates of Deposit Money Market Funds Treasuries (Bills, Notes, Bonds, TIPS) Bonds Mutual Funds Exchange Traded Funds (ETFs) StocksDiversification

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Compound Interest

At age 20, you start investing $2000 a year at 8%. But you stop after 10 years.

At age 40, your friend starts investing $2000 a year at 8% and keeps investing until you’re both 65.

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Who comes out a head?

You!

You have $462,647Your friend has only $157,908

Five Key Messages for Teachers

Never too late to save for retirement

Know your risks Indentify Fees Understand your options Fraud can happen to you

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Did you know?

58% of Americans have not calculated their retirement

needs

Source: FINRA Investor Education FoundationNational Financial Capability StudyDecember 7, 2009

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Did you know?

4 out of 10 cash out their retirement plans when changing jobs (leakage)

Source: GAO Report – October 28, 2009GAO-10-153T 401K Plans

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Know your risks

Volatility Purchasing Power/Inflation Business Specific Interest Rate Accumulation

Understand Fees

Per Transaction Beware inactivity fees

Assets Under Management As your wealth increases, their revenue

increases

Mutual Fund Fees

How are you being paid for this transaction?

Understand your Options

Ask Questions…Is this product registered with the SEC or

my state regulator?Why is this investment suitable for me?How will this investment make money?

(Dividends? Interest? Capital gains?)What are the total fees?How do I liquidate this product?

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Avoid Fraud

70% of Investors have not checked if their investment professional is registered

Source: FINRA 2007 survey (http://www.saveandinvest.org/web/groups/sai/@sai/documents/sai_original_content/P036702.pdf)

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Research, Research, ResearchCheck out Brokers and Investment Advisers

Call State Regulators, visit www.nasaa.org

Call FINRA at 1-(800) 289-9999 or visit FINRA’s Broker Check at www.finra.org

Guidance from the SEC www.sec.gov/investor/brokers.htm

SEC Investment Adviser Public Disclosure page: www.adviserinfo.sec.gov

Fraud Can Happen to You!

Fraud TypesNewslettersOn-line Fraud“Free” LunchPump & DumpPyramid/Ponzi SchemesAffinity FraudRed Flag Sales Techniques

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Investor.gov

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SEC contact information

Website: WWW.SEC.GOV

Toll free number: 1-(800) 732-0330

Mail: U.S. Securities and Exchange Commission100 F Street NEWashington, DC 20549

Name: 202-551-6394 Floydk@sec.gov