Pyramid of Risks & Rewards

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1 Pyramid of Risks & Rewards Highest Risk Highest Potential Return or Loss Stocks & Real Estate Bonds Certificates of Deposit Savings Account Lowest Risk Lowest Potential Return or Loss

2 Savings Account National average in 2008 = Today = national average savings interest rate is 0.17% The best savings rates 4.00% APY at The Bank of Greene County 0.54% 2.52% APY at Pioneer Muslim Federal Credit Union 2.02% APY at Houston Police Federal Credit Union You must fully read all the terms and requirements needed to qualify for the proposed annual percentage yield Minimum Balance Requirements 1 $5 to open $100 each day to obtain disclosed APY

3 Online Bank Account 1.00% % Why better than local? lower overhead costs they don t have to pay rent on their local branches PROBLEMS you may run into bad customer service you might have to wait a long time for checks to clear. 1 Online bank accounts make it hard to spend your money.

4 What does this mean for you??? At 0.01% APY (a typical savings interest rate at very large brick-and-mortar banks), you ll have $5, after five years. At 0.17% APY (the national average savings interest rate), you ll have $5, after five years. In 2008 = $5, At 1.00% APY (a competitive high-interest savings account rate from an online bank), you ll have $5, after five years. 4.5% = $6,125.45

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6 Swiss Bank Account How much interest will I earn on my money? It depends on the kind of account you choose as well as the going interest rates and market conditions. Swiss managed accounts tend to show substantially better long-term returns than standard interest bearing accounts, often in the 8-15% range. What is the minimum deposit? no such thing as a minimum opening balance minimum balance policy $500,000 to $2.5 million US. 1 some banks will open the account for $100,000 US or less. Most banks would like to see the potential to grow the account to the $1 million US mark or more. back

7 Certificates of Deposit % When you purchase a CD, you invest a fixed sum of money for fixed period of time six months, one year, five years, or more In exchange, the issuing bank pays you interest, typically at regular intervals. When you cash in or redeem your CD, you receive the money you originally invested plus any accrued interest. 1 But if you redeem your CD before it matures, you may have to pay an "early withdrawal" penalty or forfeit a portion of the interest you earned.

8 Certificates of Deposit At one time, most CDs paid a fixed interest rate until they reached maturity. 1 But, like many other products in today s markets, CDs have become more complicated. Investors may now choose among variable rate CDs, long-term CDs, and CDs with other special features. back

9 Bonds Anywhere from 4 24% + It's a loan - a note that's a promise to pay It's somebody borrowing money from somebody else. When interest rates fluctuate you could lose money by having a lower rate or 1 be secure by having a higher rate back

10 Stocks & Real Estate Wide range of possibilities Could lose the shirt off your back Could make millions on an initial investment of $401 All depends on what the people want at that point in time and predicting what people will want in the future

11 Two types of investing Personal investing Practiced by individuals Requires depositing or spending $ to make a financial gain in the future Stocks or bonds Economic investing Spending $ to buy capital goods to make consumer goods & services1 Machinery, technology, buildings

12 CHARACTERISTICS OF A PERFECT STOCK MUST BE A MARKET PEOPLE BUY COMPANY DOES WELL PRICE HIGHER PROFITS LONG LIFE OF COMPANY EXCELLENT EARNINGS1 SUPPORT VALUE

13 Markets: Current & Future Project must have customers today & even more tomorrow or it isn t growing. Phase of development Early Major peaks & valleys Late Tends to be relatively smooth Global markets1 Demographics Do people want this product

14 Strategies for Stock Selection Peter Lynch During a lifetime of buying cars or cameras, you develop a sense of what s good, what s bad, what sells, and what doesn t and you know before Wall Street knows it. 1 Go with what you know!

15 Economic Cycle The performance of many stocks will be affected by economic cycles

16 Economic Cycle The performance of many stocks will be affected by economic cycles. Depicted by what animal? Good times2 or Up Market Most people want to work & are employed People & businesses are spending money

17 Depicted by what animal? Economic Cycle Not so good times or DOWN Market More people than usual are out of work or worried about being out of work1 People & businesses are not buying much