investing for your future: a resource for financial security in
DESCRIPTION
TRANSCRIPT
![Page 1: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/1.jpg)
Investing For Your Future: A Resource For Financial Security In Later Life
Barbara O’Neill, Ph.D., CFP, IFYF Project Director
Interim Extension Specialist in Financial Resource Management
Rutgers Cooperative Extension
![Page 2: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/2.jpg)
2
Investing: A Topic of Great Interest Baby boomers approaching retirement More “do it yourself” employer pensions About $7 trillion in mutual funds Almost half of U.S. households own stock
directly or through funds, 401(k)s Increased media attention to investing Empirical research: investing is a topic of
interest to learners
![Page 3: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/3.jpg)
3
History of Investing For Your Future Project Committee wanted national implementation regardless of
investment knowledge and comfort level of FCS educators, subject matter responsibilities, agent & specialist vacancies, etc.
Spring 2000- Print version of IFYF home study course available & online course (www.investing.rutgers.edu) introduced
Summer 2000- Monthly e-mail message
Fall 2000- IFYF curriculum available
Fall 2001- IFYF Study Guide & Web site enhancements & research study data analysis
![Page 4: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/4.jpg)
4
IFYF Project Development
Funded by three grants from – Rutgers Cooperative Extension
– NE Regional Center For Rural Development
– The Foundation For Financial Planning
Developed by a team from 6 universities and two government agencies
“Deliverable” for Extension Financial Security in Later Life initiative
Over 1,200 registered online users Over 4,500 pre-orders for 2nd edition
![Page 5: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/5.jpg)
5
Target Audience For Program
Beginning investors
– “20 and 30-somethings”
– Older persons transitioning from savings
Investors with small dollar amounts to invest at a time
![Page 6: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/6.jpg)
6
Home Study Course Components
11 units + glossary Starts with “the basics” Action Steps at the end of each units “Ask the Experts” on online version Optional monthly e-mail message available
to registered online users Two evaluation forms: 2 months and 6
months
![Page 7: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/7.jpg)
7
The Second Edition of IFYF
Four additional external reviewers Completely updated for 2001 tax law and
other changes Professionally printed and distributed
through NRAES Two-color print and glossy cover Perfect bound Very reasonable cost (much cheaper than
duplicating and binding masters)
![Page 8: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/8.jpg)
8
IFYF Study Guide
110 pages
Master copies available from Dr. O’Neill:– Send $5 for a print copy
– Send a zip disk to get files (no charge)
Written by Dr. Ruth Lytton, Va Tech
Components:– Review Questions
– Applications (e.g., problems and Web sites)
– Answers to Review Questions (separate)
![Page 9: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/9.jpg)
9
Web Site Enhancements
Ask the Experts
Calculating What You Need to Save
– Retirement
– College
– Other financial goals
Online Extension publications (links)
![Page 10: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/10.jpg)
10
Class Series Components
Printed copy of speaker’s notes
Marketing materials
Initial and follow-up evaluation forms
PowerPoint slide files on a CD-ROM
Completely updated in December 2001
Class series content is exactly the same as the home study course
![Page 11: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/11.jpg)
11
Class Session Titles
Basic Concepts and Investing Pre-requisites
Equity Investing
Fixed-Income Investing
Investing in Mutual Funds
Investing Tax-deferred and With Small Dollar Amounts
Getting Help and Avoiding Investment Fraud
![Page 12: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/12.jpg)
Session 1
Basic Concepts and Investing Prerequisites
![Page 13: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/13.jpg)
13
Basic Building Blocks of Successful Financial Management
![Page 14: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/14.jpg)
14
Key Investing Concepts Difference between saving and investing Risk tolerance Risk versus rate of return Impact of time on money accumulation Asset allocation Personal factors that affect investing
decisions
![Page 15: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/15.jpg)
15
Breaking Habits = $$ to Invest 6 Easy Steps
1. Identify habit, frequency, and cost
2. Make decision to change
3. Act immediately
4. Share your plan
5. Stick with your plan to change
6. Celebrate your success
![Page 16: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/16.jpg)
Session 2
Equity Investing
![Page 17: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/17.jpg)
17
Common Stock
Share of ownership in a company
Elect directors
Vote on other matters
Two ways to earn money
– value of stock increases
– stock pays dividends
![Page 18: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/18.jpg)
18
Real Estate Options
Home Rental property Crop/mineral land Land for development Real Estate Investment Trust (REIT) Real estate limited partnership
![Page 19: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/19.jpg)
19
To Make Money With Collectibles Keep items in top condition
Focus on true value of property
Document evidence of value
Insure property
You may have to wait for right buyer
No regular income provided
![Page 20: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/20.jpg)
Session 3
Fixed-Income Investing
![Page 21: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/21.jpg)
21
Two Types of Investments:
Ownership
– Investors own all or
part of an asset
– Examples include:• stock• real estate• growth mutual funds• collectibles
Loanership
– Investors loan money
to companies,
government, or
financial institutions
– Examples include:• bonds
• money market funds
• CDs
![Page 22: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/22.jpg)
22
Bond Ratings
Ratings predict ability of a bond issuer to
repay debt
Investment grade: top 4 grades
– Baa to Aaa from Moody’s
– BBB to AAA from Standard & Poor’s
Lower ratings: substandard grade (a.k.a.,
“junk”, “high yield”)
![Page 23: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/23.jpg)
23
Five Tips for Fixed-Income Investors:
1. Know the risks
2. Beware of guarantees
3. Ladder your portfolio
4. Use zero-coupon bonds to hedge
stock investments
5. Match investments with goals
![Page 24: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/24.jpg)
Session 4
Investing in
Mutual Funds
![Page 25: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/25.jpg)
25
What Is Net Asset Value (NAV)?
The NAV is the price your fund pays you per share when you sell.
Value of fundNumber of shares = NAV
Example: $52,500,000 3,500,000 = $15 per share
![Page 26: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/26.jpg)
26
Match Your Goal to the Right Fund Categories with a growth objective
Growth
Aggressive growth
Small cap
Specialty (Sector)
International
Global
Index
![Page 27: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/27.jpg)
27
Seven Steps to Finding the Right Fund
1) Identify type of fund that matches goal
2) Do more reading
3) Research specific funds
4) Determine selection criteria
5) Get and read the prospectus
6) Make your purchase
7) Establish a schedule to buy more
![Page 28: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/28.jpg)
Session 5
Investing Tax-Deferred and With Small Dollar Amounts
![Page 29: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/29.jpg)
29
Class Topics Include:
Tax-Deferred Investing– Tax-free versus tax-
deferred– Employer retirement
savings plans– IRAs– Plans for the self-
employed
Investing With Small Dollar Amounts– Employer plans– IRAs– Fixed-income assets– Equity assets– Mutual Funds– Other investments
![Page 30: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/30.jpg)
30
27,6
00
31,3
00
48,3
00
58,6
00 75,8
00 98,8
00
112,
200
157,
900
160,
300
244,
700
$0
$50,000
$100,000
$150,000
$200,000
$250,000
10yrs 15yrs 20yrs 25yrs 30yrs
Taxable Returns (at 28%) Tax-Deferred Returns
German/Forgue, PERSONAL FINANCE, Fifth Edition, Tax-Sheltered Returns are Greater than Taxable Returns (Illustration: 8% Annual Return and $2000 Annual Contribution)
![Page 31: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/31.jpg)
31
Here’s What $20 a Week Adds Up To: 5% Return:
– 20 Years: $36,100
– 30 Years: $72,600
– 40 Years: $131,900
10% Return:– 20 Years:
$65,500– 30 Years:
$188,200– 40 Years:
$506,300
![Page 32: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/32.jpg)
Session 6
Getting Help and Avoiding Investment Fraud
![Page 33: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/33.jpg)
33
What This Lesson Covers
Investment resources (e.g., investment clubs, Web sites, publications)
Selecting financial professionals Investment fraud and how to avoid it
![Page 34: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/34.jpg)
34
Questions for Financial Planners
What services do you offer?
What can I expect from you?
What will it cost and how are you paid?
Who will work with me?
May I see a sample financial plan?
Are you registered with state or federal regulators?
![Page 35: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/35.jpg)
35
Types of Fraud:“Pump and Dump” Scams Promoter urges you to
“buy now or lose out”
Price rises sharply
Fraudsters sell at peak
Price drops when the hype stops
Investors lose money
0
5
10
15
20
25
30
Day1
Day2
Day3
Day4
Day5
Stock Price
![Page 36: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/36.jpg)
36
Why Pyramid Schemes Collapse Levels Number of Participants
1 6
2 36
3 216
4 1,296
5 7,776
6 46,656
7 279,936
8 1,679,616
9 10,077,696
10 60,466,176
11 362,797,056 - more than U.S. Population
12 2,176,782,336
13 13,060,694,016 - more than double World Population
![Page 37: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/37.jpg)
37
IFYF Class Series Evaluation
Post-class evaluation
– Reactions to class
– Usefulness of information
– Demographic info about participants
Follow-up evaluation
– 15 specific financial behaviors- planned & actual change as a result of IFYF
– Increased savings amount
![Page 38: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/38.jpg)
38
IFYF Class Marketing Materials
Promotional flyers
Radio script
News release
Certificate of completion
Guidelines for using financial professionals as IFYF volunteers
Speaker agreement form
Logos
![Page 39: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/39.jpg)
39
IFYF Class Series is Meant to be Flexible Use individual sessions (e.g., mutual
funds) as stand-alone classes
Use parts of class sessions (e.g., investment fraud in Session 6) as short presentations
Mix and match or delete slides, as desired
![Page 40: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/40.jpg)
40
Supplemental Materials Could Include: Net worth worksheet Applicable Web site information (e.g.,
article about decimalization of stock share prices)
Applicable clipping from newspapers (e.g., The WSJ)
![Page 41: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/41.jpg)
41
Additional Supplements
Investment books (display) Pages from Morningstar & Value Line Newspaper financial pages Clippings about current investment news
(e.g., change in savings bond rates)
Guest speakers Investment quizzes (financial firms) Hands-on activities (e.g., reading prospectus)
![Page 42: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/42.jpg)
42
IFYF Research Results
195 respondents– 127 online (nationwide) of 752 usable surveys sent
– 68 print version (3 states: NJ, FL, AZ) Data collected June-July 2001 Purposes of study
– identify characteristics/behaviors of users
– feedback on course content and format
– determine knowledge gained and behavior changed
![Page 43: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/43.jpg)
43
The Sample
Predominantly white & middle aged– 17.7% age 35 to 44
– 29.2% age 45 to 54
– 21.3% age 55 to 64
53.7% had a college degree 69.1% were married; 31.4% with dependents
51.3% had “some” prior investing experience; 28.3% had “a little”
![Page 44: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/44.jpg)
44
Course Ratings
45.4% “very valuable”
44.3% “valuable”
Five highest ranked units (in order)– Unit 8 (Investing With Small Dollar Amounts)
– Unit 6 (Investing in Mutual Funds)
– Unit 2 (Investing Basics)
– Unit 4 (Equity Investing)
– Unit 5 (Fixed-Income Investing)
![Page 45: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/45.jpg)
45
Other Findings
70.2% of respondents rated course as “basic”; 27.5% as “somewhat advanced”
128 (70%) reported investing money since completing course
Median amount: $1,800 (mode: $1,000) Significant variable relationships
– content level rating and course rating
– being a saver and demographic variables
– amount of savings and demographic variables
– knowledge gained and planned action
![Page 46: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/46.jpg)
46
Behavioral Changes
Questions about 15 behavioral changes
Behaviors from IFYF Action Steps
Top 3 actions taken:– using new investor resources (63.4%)
– learning more about investment fraud (56.1%)
– investigating specific investments (48.9%)
Top 3 actions planned:– determining amount needed to achieve goals (37.0%)
– setting specific (date/cost) financial goals (34.5%)
– increasing amount invested monthly (30.9%)
![Page 47: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/47.jpg)
47
Implications
IFYF is positively impacting participants
Diversity of audience outreach can be improved
The level of course content is on target
Emphasizing action steps results in action
Need to help learners with planned behavior changes (e.g., goals)
![Page 48: Investing For Your Future: A Resource For Financial Security In](https://reader033.vdocuments.us/reader033/viewer/2022051610/5499183ab47959f4398b457c/html5/thumbnails/48.jpg)
48
Any Questions?
IFYF curriculum materials can be ordered through Barbara O’Neill, project team leader.