basic investing
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20 Minute
Planner Series®
Presented by
Lincoln Investment
Basics of Investing
Asset Management Services and Securities offered through Lincoln Investment Planning, Inc.
Registered Investment Advisor, Broker/Dealer, Member FINRA/SIPC
218 Glenside Avenue
Wyncote, PA 19095
800-242-1421 02/12
20 Minute
Planner Series®
20 Minute Planner Series®
• Basics of Investing• College Funding Strategies• Eldercare Planning• Identity Theft • Managing Credit• Pre-Retirement Planning• Retirement Savings Made Easy• Traditional and Roth 403(b) Plans• Wealth Management• Women and Investing
20 Minute
Planner Series®
Attendance Card
20 Minute
Planner Series®
About Lincoln Investment
• Established in 1968• Dedicated to the education marketplace• Over 200,000 clients• Investment choice• Risk management• Assistance of financial advisor
20 Minute
Planner Series®
Presented by
Lincoln Investment
Basics of Investing
Asset Management Services and Securities offered through Lincoln Investment Planning, Inc.
Registered Investment Advisor, Broker/Dealer, Member FINRA/SIPC
218 Glenside Avenue
Wyncote, PA 19095
800-242-1421 02/12
20 Minute
Planner Series®
Topics
• Why start early?• Finding the money to invest• Tax-advantaged investing• Dollar-cost averaging• Risk and return• Inflation• A “simple” plan
20 Minute
Planner Series®
Why Start Early?
The chart is for illustration purposes only and should not be considered a projection of potential returns on any particular investment. All withdrawals are subject to federal income tax in the year they are withdrawn.
A penalty tax may be imposed for early withdrawals.
20 Minute
Planner Series®
Finding the Money
• Prepare a budget• Spend efficiently• Invest your income tax refund• Payroll deduction programs
– Save your raise
• Get help: Professional trainer
20 Minute
Planner Series®
Tax-Advantaged Investing
• Deferring federal income tax• Deferring state income tax• Deferring tax on growth of the portfolio• No-interest loan from the government• Taxes paid at withdrawal
– Usually at a lower tax bracket
20 Minute
Planner Series®
Tax-Deferred Growth
Investment earnings (interest, dividends and capital gains) are not taxed until withdrawn. The bar graph above assumes monthly savings of $200, a 25% tax rate and 8% annual growth. For illustration purposes only.
Not a projection of potential returns on any particular investment. 403(b)/457(b) projections are not reduced by future taxes.
20 Minute
Planner Series®
Tax-Advantaged Investing
• Types of tax-advantaged investing
– TSA: Tax-Sheltered Account — 403(b), 457(b)
– IRA: Individual Retirement Account
– 401(k): Employer-sponsored retirement plan
20 Minute
Planner Series®
Investing regular amounts steadily over time (dollar-cost averaging) may lower your average per-share cost. Periodic investment programs cannot guarantee a profit or protect against a loss in a declining
market. Dollar-cost averaging is a long-term strategy that involves continuous investing, regardless of fluctuating price levels, and, as a result, you should consider your financial ability to continue to invest
during periods of fluctuating price levels.
Dollar-Cost Averaging
20 Minute
Planner Series®
Growth of a Dollar 1970 – 2011
Hypothetical value of $1 invested at year-end 1970. Past performance is no guarantee of future results. Assumes reinvestment of income and no transaction costs or taxes. Rates represent average annual return for period given.
Investors cannot invest directly in these indexes.
$127.18
$52.25$49.55
$23.65
$9.18
$5.81
$0.10
$1.00
$10.00
$100.00
$1,000.00
Dec-6
9Dec
-70
Dec-7
1Dec
-72
Dec-7
3Dec
-74
Dec-7
5Dec
-76
Dec-7
7Dec
-78
Dec-7
9Dec
-80
Dec-8
1Dec
-82
Dec-8
3Dec
-84
Dec-8
5Dec
-86
Dec-8
7Dec
-88
Dec-8
9Dec
-90
Dec-9
1Dec
-92
Dec-9
3Dec
-94
Dec-9
5Dec
-96
Dec-9
7Dec
-98
Dec-9
9Dec
-00
Dec-0
1Dec
-02
Dec-0
3Dec
-04
Dec-0
5Dec
-06
Dec-0
7Dec
-08
Dec-0
9Dec
-10
U.S. Small-Cap (12.55%)International Stocks (10.13%)S&P 500 Index(9.99%)U.S. Government Bonds (8.02%)Money Market (5.56%)Inflation (4.39%)
1
43
2
5
6
20 Minute
Planner Series®
Asset Class Range of Returns
Returns listed represent 95% of the total range of returns for the period Jan. 1970 to January 2010. Assumes reinvestment of income and no transaction costs or taxes. Mean return is average annual return for the period listed. Past
returns are no guarantee of future results. Investors cannot invest directly in these indexes.
63.24%
48.64%44.82%
20.14%
7.40% 7.05%
-38.15%
-28.38%-24.85%
-4.09%
1.72%3.72%
12.55% 10.13% 9.99% 8.02% 5.56% 4.39%
-45%
-25%
-5%
15%
35%
55%
75%
U.S. Small-Cap
InternationalStocks
S&P500 Index
U.S.Government
Bonds
MoneyMarket
Inflation
High RangeLow RangeMean Return(%)
20 Minute
Planner Series®
Value of Diversification
15
20 Minute
Planner Series®
For illustration purposes only
Inflation
Below is a hypothetical example of how much you may need over the next 5, 10, 15, 20 and 25 years to equal the
purchasing power of $10,000 today, assuming a 4 percent annual inflation rate:
20 Minute
Planner Series®
A Simple Plan!
Higher Risk
Higher Return Potential
Lower Risk
Lower Return Potential
Aggressive Growth Funds
Growth Funds
Bond & Value Funds
Money Funds
Greater
than 10 Yrs.
(Growth)
4 to 10 Years
(Moderate)
2 to 4 Years
(Cautious)
6 Months to 2 Years(Current)
20 Minute
Planner Series®
The Time Value of Money
Number of Years
Interest Rate
Present Value
Annual Payments
Future Value
20 6 0 $600 $23,395
Number of Years
Interest Rate
Present Value
AnnualPayments
Future Value
30 6 0 $600 $50,281
Number of Years
Interest Rate
Present Value
AnnualPayments
Future Value
30 6 0 $1,200 $100,562
Based on beginning of period payments.
20 Minute
Planner Series®
Summary
• Start early or get started now!• Find the money• Get help
– Uncle Sam– Professional trainer
• Understand the risk/return relationship• Start a simple plan
20 Minute
Planner Series®
Diversification does not assure a profit or protect against market loss. There is no assurance that a diversified portfolio performs better than an undiversified portfolio.
An investment in a money market fund is not insured or guaranteed by the FDIC or any other government agency. Although a money market fund seeks to preserve the value of your
investment at $1.00 per share, it is possible to lose money by investing in the fund.
Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than original cost. Past performance does not guarantee future returns. A
prospectus will be available for each fund whose shares are offered.
Small cap stocks may be subject to a higher degree of risk than more established companies’ securities. The illiquidity of the small cap markets may adversely affect the value of these
investments so those shares, when redeemed, may be worth more or less than their original cost.
MSCI EAFE Index is a capitalization-weighted index of the leading stocks in Europe. Membership of the index is selected by MSCI and designed for leading stocks roughly to match market sector
weights.
S&P 500 Index is an index of 500 of the largest exchange-traded stocks in the US from a broad range of industries whose collective performance mirrors the overall stock market. Past
performance is no guarantee of future results. Investors cannot invest directly in market indexes.
International investing involves special risks, including the possibility of substantial volatility due to currency fluctuation and political uncertainties.
Treasury bonds (T-bonds are long-term debt instruments with maturities of ten years or longer issued in minimum denominations of $1,000.
20 Minute
Planner Series®
Attendance Card
20 Minute
Planner Series®
Presented by
Lincoln Investment
Basics of Investing
Asset Management Services and Securities offered through Lincoln Investment Planning, Inc.
Registered Investment Advisor, Broker/Dealer, Member FINRA/SIPC
218 Glenside Avenue
Wyncote, PA 19095
800-242-1421 02/12
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