Foundations of Investing

Transcription

1 Member SIPC Foundations of Investing 1

2 5 HOW CAN I STAY ON TRACK? 4 HOW DO I GET THERE? 1 WHERE AM I TODAY? MY FINANCIAL NEEDS 3 CAN I GET THERE? 2 WHERE WOULD I LIKE TO BE? 2

3 Develop a Strategy Stick with Quality Invest for the Long Term Diversify Focus On What You Can Control Why Leads to How 3

4 Rule 1 Develop a Strategy 4

5 REAL ESTATE SILVER FADS GOLD TECH O INTERNET IL DIGITAL Rule 2 Stick with Quality 5

6 Rule 3 Diversify 6

7 DIVERSIFY VARIETY Bonds 7

8 Why Bull & Bear? 8

9 BOUGHT SHARE OF STOCK FOR $20 COMPANY SHARES $10 CAPITAL GAIN $20 $30 SOLD SHARE OF STOCK FOR $30 Stocks 9

10 Dividends Are Important Average Annual Return 9.1% 2.5% Stocks Not Paying Dividends Stocks Paying Dividends Source: Ned Davis Research, 12/31/ /31/16. Uses indicated annual dividends on a rolling 12-month basis. Past performance may not be an indication of future results. The S&P 500 is an unmanaged index and is not meant to depict an actual investment. Does not include transaction costs or taxes. Dividends can be increased, decreased, or eliminated at any point without notice. Further distribution prohibited without prior permission. Copyright 2016 Ned Davis Research, Inc. All rights reserved. Stick with Quality 10

11 Average Annual Return 20% 15% 10% 18.9% 17.0% Dividend-paying stocks Non-dividend-paying stocks 5% 0% -5% -10% -15% -20% -25% -30% -13.1% -25.5% Bull Markets Bear Markets Source: Ned Davis Research, 12/31/ /31/2016. Uses indicated annual dividends on a rolling 12-month basis. Past performance may not be an indication of future results. The S&P 500 is an unmanaged index and is not available for direct investment. Does not include transaction costs or taxes. Dividends can be increased, decreased, or eliminated at any point without notice. Further distribution prohibited without prior permission. Copyright 2016 Ned Davis Research, Inc. All rights reserved. Quality Makes a Difference 11

12 GROWTH INVESTORS INCOME INVESTORS INVESTORS GROWTH & INCOME INVESTORS Packaged Investment Products 12

13 MULTIPLE COMPANIES Diversification Professional Management Benefits of Mutual Funds 13

14 BONDS = % INTEREST STOCKS = SHARE PRICE OF MUTUAL FUNDS DIVIDENDS $ CAPITAL GAINS $ DISTRIBUTION Mutual Funds Earnings 14

15 Rule 4 Invest for the Long Term 15

16 Systematically Investing vs. Lump-sum Investment Share Price $26 $24 $22 $20 $18 $16 $14 $12 $10 $8 $6 $4 $2 $0 Lump Sum $5,000 Average Price: $20/share Total Purchased: 250 Shares Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Share Price Dollar Cost Averaging $417/Month $26 $24 $ $20 21 Average Price: $17/share $18 24 $ $14 28 $ $10 $8 Number of Shares Purchased $6 $4 $2 Total Purchased: 300 Shares $0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Edward Jones. These charts are for illustrative purposes only and are not intended to represent the performance of any security. These illustrations do not include commissions or fees. Past performance does not guarantee future results. Systematic Investing 16

17 Plan Budget Review Rule 5 Focus On What You Can Control MKD-7727C-A-SL EXP 28 FEB EDWARD D. JONES & CO, L.P. ALL RIGHTS RESERVED. 17

18 You can control: Saving and spending habits Having an emergency fund Your level of debt You can t control: Stock market Tax laws Every investment has some risk MKD-7727C-A-SL EXP 28 FEB EDWARD D. JONES & CO, L.P. ALL RIGHTS RESERVED. 18

19 Rule 1 Develop a Strategy 2 Stick with Quality 3 Diversify 4 Invest for the Long Term 5 Focus On What You Can Control Summary 19

20 & Questions Answers 20

21 Thank You PLEASE COMPLETE YOUR EVALUATION NOW Member SIPC 21