AAII AAII Making the Most of Your Money Making the Most of Your Money May 16 16, , 2009 2009 May Jonathan Pond Jonathan Pond
Safe Money in Tough Times Safe Money in Tough Times The Key to Financial Success The Key to Financial Success Never take financial responsibility for Never take financial responsibility for anything that eats anything that eats
Safe Money in Tough Times Safe Money in Tough Times This time it’ ’s different s different This time it Predicting the future is perilous Predicting the future is perilous Some things are predictable: : Some things are predictable – We We’ ’ll get out of the doldrums ll get out of the doldrums – – Some will emerge better off than others Some will emerge better off than others –
Safe Money in Tough Times Safe Money in Tough Times Anybody who says there’ ’s safety in s safety in Anybody who says there numbers hasn numbers hasn’ ’t looked at the stock market t looked at the stock market pages. . pages Irene Peter Irene Peter
Safe Money in Tough Times Safe Money in Tough Times Talking to politicians about the economy is Talking to politicians about the economy is like talking with eight- -year year- -olds about sex olds about sex. . like talking with eight They have heard all the words, , but they but they They have heard all the words haven' 't a clue t a clue. . haven Michael Aronstein Michael Aronstein
Safe Money in Tough Times Safe Money in Tough Times Concerned About the Health of Concerned About the Health of Your Credit Union or Bank? ? Your Credit Union or Bank Deposit accounts are protected Deposit accounts are protected If institution fails, , you will usually have you will usually have If institution fails access to your money within a day access to your money within a day
Safe Money in Tough Times Safe Money in Tough Times Concerned About the Health of Concerned About the Health of Your Insurance Company? ? Your Insurance Company Healthy insurance companies usually take Healthy insurance companies usually take over the policies over the policies State insurance funds offer some State insurance funds offer some protection protection
Safe Money in Tough Times Safe Money in Tough Times Advice for Homeowners Advice for Homeowners Why did you buy a house, , anyway anyway? ? Why did you buy a house Your house will still turn out to be a Your house will still turn out to be a wonderful investment wonderful investment If you’ ’re having trouble keeping up with your re having trouble keeping up with your If you mortgage… … mortgage If you have to sell now… … If you have to sell now
Safe Money in Tough Times Safe Money in Tough Times Advice for Home Buyers Advice for Home Buyers Your timing is impeccable Your timing is impeccable Don’ ’t wait around for the perfect time t wait around for the perfect time Don Spiff up your finances Spiff up your finances
Safe Money in Tough Times Safe Money in Tough Times When is it Worthwhile to Refinance When is it Worthwhile to Refinance a Mortgage? ? a Mortgage 1% lower rate lower rate if you have a fixed rate if you have a fixed rate 1% mortgage mortgage If you have a variable rate, , consider a consider a If you have a variable rate fixed mortgage now fixed mortgage now Don’ ’t refinance over a longer period t refinance over a longer period Don
Safe Money in Tough Times Safe Money in Tough Times If medical science continues to prolong If medical science continues to prolong human life, , some of us may eventually pay some of us may eventually pay human life off the mortgage. . off the mortgage Anonymous Anonymous
Safe Money in Tough Times Safe Money in Tough Times It’ ’s Time to Get Your Debt Under s Time to Get Your Debt Under It Control Control Don’ ’t follow the government t follow the government’ ’s example s example. . Don Never borrow to buy a depreciating asset Never borrow to buy a depreciating asset Avoid adding to debt Avoid adding to debt
Safe Money in Tough Times Safe Money in Tough Times What to Do With Your Investments What to Do With Your Investments Now … Now … Avoid any big moves Avoid any big moves Check your diversification Check your diversification
Safe Money in Tough Times Safe Money in Tough Times The Way You Should Invest The Way You Should Invest Depends on Depends on… … When you’ ’re going to start needing the re going to start needing the When you money money How long the money is going to have to How long the money is going to have to last last
Safe Money in Tough Times Safe Money in Tough Times The Way You Should Invest… … The Way You Should Invest Example 1 1: : You You’ ’re going to buy a house in re going to buy a house in Example four years four years Need money in four years Need money in four years All will be used in four years All will be used in four years Most of the money should be kept in safe Most of the money should be kept in safe investments like CDs investments like CDs
Safe Money in Tough Times Safe Money in Tough Times The Way You Should Invest… … The Way You Should Invest Example 2 2: : College savings needed in four College savings needed in four Example years years Need to tap into money in four years Need to tap into money in four years Money will be needed for four years Money will be needed for four years thereafter thereafter Invest primarily in safe securities with Invest primarily in safe securities with some money in stocks some money in stocks
Safe Money in Tough Times Safe Money in Tough Times The Way You Should Invest… … The Way You Should Invest Example 3 3: : You You’ ’re going to retire in four re going to retire in four Example years years Need to tap into money in four years Need to tap into money in four years Money will be needed for 25 25 or more years or more years Money will be needed for thereafter thereafter Invest in both stocks and interest- -earning earning Invest in both stocks and interest securities - - retirees need both income and retirees need both income and securities growth to meet rising living costs growth to meet rising living costs
Safe Money in Tough Times Safe Money in Tough Times I’ ’ve got all the money I ve got all the money I’ ’ll ever need if I die by ll ever need if I die by I four o’ ’clock clock. . four o Henny Youngman Youngman Henny
Safe Money in Tough Times Safe Money in Tough Times The Problem with Throwing in The Problem with Throwing in the Towel the Towel When the stock market recovers, , it does it does When the stock market recovers so very quickly so very quickly Those who abandon or greatly reduce Those who abandon or greatly reduce stocks have trouble deciding when to get stocks have trouble deciding when to get back in. . back in
Safe Money in Tough Times Safe Money in Tough Times Investment Advisory Investment Advisory Many mutual funds have seen their values Many mutual funds have seen their values decline much more than the averages. . decline much more than the averages So this is a good time to review the So this is a good time to review the performance of your mutual funds to weed performance of your mutual funds to weed out any weaklings out any weaklings One source for performance information is One source for performance information is www. .reuters reuters. .com com www
Safe Money in Tough Times Safe Money in Tough Times 401( (k k) ) and and 403 403( (b b) ) Reminder Reminder 401 Most workplace retirement plans offer Most workplace retirement plans offer more stock fund choices than bond and more stock fund choices than bond and stable value choices stable value choices This can lead many plan participants to This can lead many plan participants to have a very high percentage in stocks have a very high percentage in stocks
Safe Money in Tough Times Safe Money in Tough Times The only sure way to accumulate what you The only sure way to accumulate what you need to achieve financial security is to need to achieve financial security is to save regularly and regularly increase the save regularly and regularly increase the amount you’ ’re saving re saving amount you
Safe Money in Tough Times Safe Money in Tough Times There is a silver lining amidst the There is a silver lining amidst the stock market clouds: : stock market clouds If you’ ’re contributing to your investment re contributing to your investment If you accounts regularly, , you you’ ’re benefiting from re benefiting from accounts regularly dollar cost averaging . . dollar cost averaging Dollar cost averaging is a winning is a winning Dollar cost averaging investment strategy. . investment strategy
Safe Money in Tough Times Safe Money in Tough Times My problem lies in reconciling my gross My problem lies in reconciling my gross habits with my net income. . habits with my net income Errol Flynn Errol Flynn
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