invest in yourselfA W O M E N ’ S W E A LT H W O R K S H O P

W I - F I N E T W O R K : F U T U R E A D V I S O R G U E S TPA S S W O R D :

WELCOME AND AGENDA

• Welcome

• Women & Investing by Megan Graf

• Presentation: 60 Minutes to Change your Future by Robert Shaye

• Q & A

• Break-out Sessions with the FutureAdvisor Team

WOMEN IN THE MEDIA

http://www.thinkadvisor.com/2014/07/28/women-money-and-the-confidence-gaphttp://www.investmentnews.com/article/20140623/BLOG05/140629978

WOMEN AS INVESTORS

A study published this month, for example, claims that hedge funds run by women returned 9.8% in 2013 (to the end of November), versus a paltry 6.13% for the HFRX, which tracks hedge funds generally.

“Do men doubt themselves sometimes? Of course. But they don’t let their doubts stop them

as often as women do.”The Confidence Gap, The Atlantic

Men trade 45 percent more than women, and trading reduces men’s net returns by 2.65 percentage

points a year as opposed to 1.72 percentage points for women. Women trade less frequently and hold

less volatile portfolios. Thus, women beat men by an average of about one percentage point annually on a

risk-adjusted basis.http://gsm.ucdavis.edu/blog-feature/gender-differences-investing

THE V IS ION – INVEST IN YOURSELF

EDUCATE

PROVIDE ACTIONABLE NEXT STEPS

• “We see that women, who were taught about investing by someone, tend to be more confident in investing. Financial literacy makes a huge difference and has positive rippling effects for future generations.”

• https://www.wellsfargo.com/press/2013/20130919_womenachieveaffluence

• Simplify jargon and complex topics • Answer questions

• Outline options and resources

• Clarify what makes a good investor

RE-DEFINE PERCEPTIONS

“THE MOST POWERFUL WOMAN ON WALL

STREET”

invest in yourself

6 0 M I N U T E S T O C H A N G E YO U R F U T U R E

BY R O B E RT S H AY E

Have 3.5 million dollars up front?

Start with a penny and have your balance double every

day for one month? or

WOULD YOU RATHER….

The value of the balance doubling after 30 days is: $5,368,709!

Although I have a passion for these topics, the views expressed are not intended to serve as a forecast, a guarantee of future results, investment recommendations or an offer to buy or sell securities. This should not be interpreted as tax advice and please consult your personal tax advisors if you have any questions.

Who I am

Who I’m not (Disclaimer)

HOUSEKEEP ING

Housekeeping @FutureAdvisor #InvestInYourself

Where my approach/advice comes from

• Behavioral Finance• Understanding your current situation• Credit Scores• Retirement, the time value of money,

& 401k / 403b• Investing 101• Savings accounts & fees• Love & Money• Home ownership, mortgages, refinancing, & renting• Tax strategy• Life insurance / Health Insurance• Tactical next steps

T O P I C S

•Save 20% of your salary• Pay Yourself First!• Live below your means

• Invest in low-cost index funds• “Be Average” – it’s a good thing

•Don’t react emotionally• Stay with your strategy for the long haul - “Don’t Dance”

I F N O T H I N G E L S E , R E M E M B E R T H I S !

Wealth

Hap

pine

ss

H A P P I N E SS & W E A LT H

• People are not rational with financial decisions (susceptible to framing, prospect theory, anchoring, choice architecture, & the default option)

• Study: the more often you check your portfolio the worse you do• We don’t like losing! (Prospect Theory) (DMR)• Commitment devices!

• Google’s anchoring experiment (3% increase)

W H Y W E N E E D A N AU T O M AT I C P L A N

• “Save More Tomorrow” (12% vs 4%)

Scenario 1:

Fund A: StocksFund B: Bonds

54% allocation to stocks

Scenario 2:

Fund A: StocksFund B: ½ Bonds ½ Stocks

73% allocation to stocks

Scenario 3:

Fund A: ½ Bonds ½ StocksFund B: Bonds

35% allocation to stocks

W H Y W E N E E D A N AU T O M AT I C P L A N ( C O N T I N U E D )

• Allocation Decisions & 1/n:

• 20 mins - capture your “Net Worth” (all assets & debts)• Use Mint.com; connect banking & investment accounts, student/car loans• Include property (homes & cars)

• Homes: zillow.com• Cars: edmunds.com

• 10 mins - understand your credit score• Signup for CreditKarma • Pull a free credit report from annualcreditreport.com; Experian in Jan, TransUnion

in Apr, Equifax in Aug

• 15 mins – analyze your current investments and get free advice: www.FutureAdvisor.com

• (optional) 30 mins - create a spending plan (aka budget)• Can be in Mint or even Excel• Savings must be a part of your plan

P R I O R T O T H E W O R K S H O P

• Check Mint often • Spend < make

• Save xx% of your income

• “Pay yourself first” – schedule savings

• Debts• Credit Cards & student loans• BT offers

• Understand your current allocation & fees

U N D E R S TA N D I N G YO U R C U R R E N T S I T UAT I O N

• Time Value of Money is HUGE

• The “Rule of 72”

• $$ saved from 25-35 > $$ saved 35 on

• Everyone should have a (ROTH) IRA & 401k!

• Are you on-track?• ~75% of ending salary per year

• 1x by 35, 3x by 45, 5x by 55

See handout

“ I ’ L L W O R RY A B O U T R E T I R E M E N T L AT E R … ”

IRA

• 2014 Limit: $5,500

• No matching

• Hold at any institution

• Thousands of investment options

• Only contribute cash

• Income limits • Different for Roth vs Trad

• Jan 1 – Apr 15 (of following year) open period

401(k) / 403(b)

• 2014 Limit: $17,500

• May get matching

• Hold at company’s chosen firm

• Limited choices

• Only contribute from payroll

• No income limits

• May get a Roth option

• Jan 1 – Dec 31 open period

R E T I R E M E N T A C C O U N T S

Roth

• After-tax contributions (pay tax now)

• Earnings grow tax-free

• Roth IRA’s have no RMD’s

• Roth IRA income limit: < $114k

• “Backdoor Roth” option

Traditional

• Pre-tax contributions (get a tax break now)• $120k salary, contribute max amount

of $17,500• Taxable income now $102,500• 28% x $17,500 = $4,900

• Taxed on the way out

• Traditional IRA’s have RMD’s

• Really depends on tax bracket now vs. retirement• Beliefs on long-term tax brackets / code / law• Solution: have some in each

U N C L E S A M W I L L A LWAY S G E T PA I D

I N V E S T M E N T T Y P E S

• Cash

• Bonds• Debt instrument• Corporate, government, municipal• Value fluctuates based on demand and interest rates

• Stocks• Underlying ownership in a publicly-traded company• Value fluctuates based on demand in the marketplace• All research shows stock picking does not work!

• Mutual Funds• A pooled basket of cash, bonds, and/or stock• Can be actively managed or track an index (called index funds)

• Exchange-Traded Funds (ETFs)• Also a pooled basket of cash, bonds, and/or stock• More tax-efficient than mutual funds• Typically cheaper• Trade & settle quicker than mutual funds

Exchange Traded Fund (ETF)

Mutual Fund

Cash

Bond

Stock

I N V E S T I N G 1 0 1

CashBond

StockMutual Fund Exchange Traded Fund

(ETF)

Inve

stm

ent T

ypes

Acco

unt T

ypes Checking Taxable

Account

(Individual, Joint, Trusts)

Traditional IRA Roth IRA 401(k)

(Can be Roth or Traditional)

Goa

ls

Expenses and Emergency Savings

Expenses prior to retirement: house, college, wedding

Expenses in retirement

I N V E S T I N G 1 0 1

CashBond

StockMutual Fund Exchange Traded Fund

(ETF)

Checking Taxable Account Traditional IRA Roth IRA 401(k)

Expenses and Emergency Savings

Expenses prior to retirement: house, college, wedding

Expenses in retirement

Inve

stm

ent T

ypes

Acco

unt T

ypes

Goa

ls

I N V E S T I N G 1 0 1

CashBond

StockMutual Fund Exchange Traded Fund

(ETF)

Checking Taxable Account Traditional IRA Roth IRA 401(k)

Expenses and Emergency Savings

Expenses prior to retirement: house, college, wedding

Expenses in retirement

Inve

stm

ent T

ypes

Acco

unt T

ypes

Goa

ls

• Write down your financial principles / guidelines

• 20-25% for “fun” if you must

• Active vs. Passive Investing:

research shows ~80-90% of

active funds underperform their

benchmark

• 8,000 2,000 500 125

• 20% most actively traded

accounts performed much worse

-men worse than women

• Past fund performance has very little predictive power to future performance!

• In fact, expense ratios are the best predictor

I N V E S T I N G 1 0 1 & A C T I V E V S . PA SS I V E

• Industry average (0.80% 2.50%)

• Low cost options (0.06% 0.50%)

• Get angry…it’s your money!

• Use the calculator

• Who wins the prize?

• Why rollover an old 401k

“It is difficult to get a man to understand something, when his salary depends on his not understanding it.”

–Upton Sinclair

E X P E N S E R AT I O S ( T H E E N E M Y )

• With proper allocation, you should reduce risk (volatility) and outperform the S&P 500

• Rebalancing: meeting long-term policy target weights

• Use it as a disciplined way of buying low and selling high

• “..shunning the loved & embracing the unloved. Most people do the opposite.” (Swensen)

• Example: 1990-2012 portfolio: +0.5% difference in return, -2% difference in volatility

MY TARGET ALLOCATION

A SS E T A L LO C AT I O N A N D R E B A L A N C I N G

Invest In Yourself Too!

What about alternatives?

P R E C E D E N C E O F S AV I N G

Matching 401(k) or 403(b) – Max It!

Emergency Fund (~6-9 months)

Pay Down Debt(s)

Roth IRA / 401k

Traditional IRA /401k

Taxable Account

Home ownership & mortgages•Up to a $300/month because of credit score• Real estate is a key component • Consider NOT holding your mortgage with the same

bank as your investments • Typically 20% down, qualify for a home 3x your annual

gross income• Closing costs, points• Refinancing • Being a landlord can be tough!

•Rent : Income < 30% (rule of 36)• Impact in high-rent markets (SF / NYC)

•Have rental package ready • Credit pull• Ask for a copy of credit report

•Security deposit & interest• 0.3% currently in SF

•Zillow’s “zestimate”

R E N T

• Look for ways to reduce your taxes• Traditional 401k / IRA • Mortgage interest (& property management fees)• Education expenses

• Consider capital gains (realize gains if you ever find yourself in the 10 or 15% tax bracket. 0% long term gains)• IRA conversions• Donate to charity with

appreciated stock• Hire a professional – taxes

are “grey” – ask questions!

R E D U C E YO U R TA X E S

Paying down student loans vs. saving for retirement• Max matching contributions• Consider interest rates:

• Loan rate: • <2% Invest• 2% - 10% Calculate• >10% Pay Down

• Both are urgent!• Save some to build the habit• Consider tax deduction•Windows are closed for good!• Grandma’s inheritance

S T U D E N T LOA N S V S . S AV I N G

• Never go without health insurance!• “Exotic” or “alternative” asset classes• Careful with your contracts• Always look for discounts

• Cell phone bills (15%-20%)• AAA, movies, restaurants, museums, parks• Driving habits• Avoid buying a new car

• Remember: smart investingis not very exciting, but it isvery rewarding! (Be average!)• Fatwallet Cash Back• Company stock plans

O T H E R R A N D O M A D V I C E

•Automate your savings (pay yourself first)

“Hack human biases”

•Open a (ROTH) IRA

•Enroll in your company’s 401k

•Stick to low-cost index funds

•Help a friend (ER) or 19 yr

old cousin

•Don’t let inaction win!

TA C T I C A L N E X T S T E P S

A chance to apply what you just learned:

Meet Hannah:Hannah is 28 years old and lives in San Francisco. Hannah makes $85k / year and is anticipating a $5k raise in Jan 2015. She is engaged and is getting married in 10 months, and hopes to have kids in the next 2-3 years. She has $45k in student loan debt at 6% and $4k in credit card debt at 14%. She is currently contributing to her Roth IRA but it is sitting in cash and she doesn’t know how to invest it. She thinks her company may offer matching 401k contributions but she isn’t quite sure how to set up contributions.

What advice could you give Hannah? How should she proceed?

YO U R T U R N !

• Fatwallet Finance Forums• Bogleheads• Blogs: Mr. Money Mustache, Oblivious Investor, CoffeeHouse Investor

M Y P E R S O N A L FAVO R I T E F I N A N C E R E S O U R C E S

ONLINE

READINGS/BOOKS

• Planet Money - NPR• http://www.forbes.com/sites/quora/2013/05/01/personal-finance-for-young-profess

ionals/• http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Amount-of-Roth-IR

A-Contributions-That-You-Can-Make-for-2014• The Missing Link – Personal Financial Management (geared towards college students

and young adults)• Random Walk Down Wall Street

• Save 20% of your salary• Pay Yourself First!• Live below your means

• Invest in low-cost index funds• “Be Average” – it’s a good thing

• Don’t react emotionally• Stay with your strategy for the long haul - “Don’t

Dance”

Q U E S T I O N S ?

From Registration

• Does it matter whether I invest with Charles Schwab, Vanguard, etc.?• How to invest wisely. Ok to invest in pre-IPO or post-IPO stocks? • Are bonds worth investing in these days? • Most 401k funds have fees associated with it, which eat into your investment.

What is a good way to avoid this or be mindful of this?

WORKSHOP

1. Investment Strategies + Recapping the Basics• Bo Lu – Co-Founder and CEO• Sean – Client Services Specialist• Patrick – Financial Advisor

2. Credit Scores + Precedence of Saving• Robert – Head of Customer Education• Brian – Director of Activation

3. Product Demo + Service• Ephrat – Director of Algorithms• Jeannie – Operations Analyst• Megan – Enrollment Lead

4. General Q&A• Lisa – Software Engineer• Will – Financial Advisor• Mitch – Financial Advisor