investment insights & specific recommendations most frequently asked questions

INVESTMENT INSIGHTS &

SPECIFIC RECOMMENDATIO

NSMost Frequently Asked Questions

1. I have some extra money, what investment would be good for me?

1 – Diversified

2 – Allocated

3 – Low Expenses

Found at: https://personal.vanguard.com/us/content/Funds/FundsVanguardFundsTargetOverviewJSP.jsp

Vanguard meets these three requirements

https://personal.vanguard.com/us/content/Funds/FundsVanguardFundsTargetOverviewJSP.jsp

https://personal.vanguard.com/us/content/Funds/FundsVanguardFundsTargetOverviewJSP.jsp


Companies Bonds3,381

4,762478493831

… as of 8/31/2010

5,183 4,762TOTALS


1. What Investment

2. I want to do my own investing, where can I find quality

information?

1. What Investment2. Quality

Information

3. I have some money that I am going to use shortly, where should I

put it?

1. What Investment

Depends on your Time Line

2. Quality Information

Less than 2 years = Money Market2 to 5 years =Conservative Portfolio5 to 10 years = Balanced PortfolioMore than 10 years = Equity Portfolio

3. Short Term Money

Where can I find these Portfolio? – Next Question

4. Where can I find good Portfolio Allocations?


Information3. Short Term

Money




Money

ALLOCATION




Money4. Good Portfolios

5. I heard I should invest in Index Funds, would you agree with that?



Money4. Good Portfolios

http://www.ifa.com/12steps/step3/step3page2.asp

Active Investing vs. Passive Investing



5. I heard I should invest in Index Funds, would you agree with that?



Money4. Good Portfolios5. Index Funds

6. What company is the best to set up my account at?



Money4. Good Portfolios5. Index FundsA Discount Brokerage

A Discount Brokerage gives you:

1.Money Market Checking Account

1.Higher Interest

2.Lower Fees (no overdraft penalties)

2.Much easier investment buy/sell optionsHighest Ranked = Charles Schwab

6. Discount Brokerage

7. Should I invest in Real Estate1. What Investment2. Quality




$ 40,000 Down

$ 360,000 Debt

$400,000 Duplex

Your Investment

Borrowed Money

10% Appreciation

$ 40,000 Gain

$ 40,000 Gain$ 40,000 Down

100% Gain

$ 40,000 Loss$ 40,000 Down

100% Loss

A. Leverage - Debt

1. Positives




A. Leverage - Debt


1. Positives

B. Rent – ‘Free (unearned) Income’C. Depreciation – ‘non-cash’ expense




A. Leverage - Debt


1. Positives

B. Rent – ‘Free (unearned) Income’C. Depreciation – ‘non-cash’ expense

D. Behaviorally sound

A. Leverage – High Risk Investment

2. Negatives

B. Landlord – High Maintenance investment




SOUND REAL ESTATE PRINCIPLES

1. Avoid “nothing down” workshops

2. Avoid real estate “counselors”

3. Avoid time share “investments”

4. Employ an excellent CPA advisor

5. Establish a relationship with a bank appraiser

6. Guidelines:

1. 50% vacancy for six months

2. Don’t own long distance

3. Be sure you’ll live in the area for, at least, 5 years

4. The first home – a duplex


7. Real Estate

8. Should I invest in Gold or Precious Metals




Worst Investment for the past 30 years


7. Real Estate

Dow Jones

Gold Index





Best Investment for the past 3 years


7. Real Estate

Gold

Dow Jones






7. Real Estate

8. Precious Metals

Brigham Young

The time will come that gold will hold no comparison in value to a bushel of wheat . . . Gold is good for nothing, only as men value it . . . It is not half so good as the soil from which we raise our wheat.

- June 5, 1853, Journal of Discourses 1:248





7. Real Estate

8. Precious Metals

1.Very High Commissions

2.Surrender Penalties

3.High Investment Fees

4.Capital Gain Income become Ordinary Income

5.Equity Index Annuities – a good deal!

9. Somebody tried to sell me an Annuity or Investment Life Insurance Policy, are they good investments?

Hot Deal!!An investment

Goes up, but never down

No commission





7. Real Estate

8. Precious Metals


1.Very High Commissions

2.Surrender Penalties

3.High Investment Fees

4.Capital Gain Income become Ordinary Income

5.Equity Index Annuities – a good deal!Hot Deal!!An investment

Goes up, but never down

No commission

Those Investment Management Fees2% to 3% higher than necessary

2% difference

8% = $527,454 10%

= $ 1,048,250

3% difference

9% = $740,488 12%

= $ 2,114,546






7. Real Estate

8. Precious Metals9. Insurance &

Annuities

10. I don’t have any money but I want to start investing, what can I

do?





7. Real Estate

8. Precious Metals

Minimums For Investing

1.Checking Account = $10

2.Mutual Fund/Brokerage

1.Lump Sum = $500 - $2,000

2.Automatic Withdrawal = $50/month

9. Insurance & Annuities

10. Minimum Investments

11. What books should I read to learn more about investing?





7. Real Estate


Annuities10. Minimum

Investments

Recommended Books

This list is found on Blackboard






7. Real Estate



Investments

Recommended Books






7. Real Estate



Investments

NOT Recommended Books






7. Real Estate



Investments11. Books

12. Have you heard about ____ investments, do you like those?





7. Real Estate




If you have to ask if I have heard about it, it is most likely an Alternative

InvestmentsThese investments are too risky or

speculative.Examples:

1. Tax Liens

2. Discounted Notes

3. Hard Money Lending

4. Real Estate Flipping

5. Options

6. Hedge Funds

7. Margin Trading






7. Real Estate




Something we found recently

An ad on Yahoo!






7. Real Estate




Something we found today!

An add on Yahoo

12. Alternative Investments

13. I have some debt, what is the best approach to get rid of it?





7. Real Estate




Australian Loan


13. Debt

14. Should I put money in a Roth or Traditional IRA





7. Real Estate




If you pay Taxes = Traditional IRA


If you Don’t pay Taxes = Roth IRA

40% of People Don’t Pay Taxes

13. Debt

14. Roth vs. Traditional IRA

20% of People Pay 80% of the Taxes

Invest Taxes Saved - R.E.S.I.R.V.

Contribution = $500/month

ROTH

ROTH

ROTH

Federal Tax = 0%State Tax = 0%

TOTAL TAX = 0%


TOTAL TAX = 22%


TOTAL TAX = 32%

$ 5,250,000

TRAD

TRAD

$ 6,720,000TRADI T IONAL

$ 7,710,000

+22%

+32%

EMPLOYER TAX

MATCH

$ 10,170,000+64%

Investment annual growth = 10%Employer Match = 100%

How much tax do retirees’ pay

72% in lower tax bracket than when IRA was contributed

50% of all Americans pay no income tax

Which tax will increase?

Value added, consumption, federal sales tax transaction

Capital gain tax increase does not apply to IRA accounts

Qualified charitable contributions

Tax paid on conversion now can never be reclaimed

Many withdrawal options pay no tax or result in no tax

Energy saving tax credits

Any tax deductible expense

Payments to long-term care policies

Payments to a Health Savings Account

Withdrawals where disabilities or unemployment have reduced tax bracket

Taxes saved and invested are matched by employer doubling the tax saved benefit

WHY ROTH

investment insights & specific recommendations most frequently asked questions

Documents

investment slide

short term money slide

quality information

extra money

index funds slide

discount brokerage slide

good portfolio allocations

passive investing slide