Transcript Slide 1

Polsky Personal Investing
Method
LESSONS FOR LIFE are not being taught in
colleges – you are preparing for your future
through a college degree but NOW you
should begin protecting your own future by
NOT depending on government Social
Security or Medicare and employer’s 401(k).
Slides by: Andrew, Ryan, Mitch & Trent
Students In Free Enterprise (SIFE)
Norman & Elaine Polsky
Family Supporting Foundation
OBJECTIVES:
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To encourage fellow students in all disciplines
to start NOW their Roth IRA.
To continue investing monthly to become
financially independent past the age of 100.
Attain self-sufficiency and to be able to make
a difference in helping not-for-profits (i.e.
SIFE) by contributing their money and time
by being active on boards of directors and
other services.
Why Is This Important To Me?
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It always seems to come down to MONEY.
Mom says to Dad, “I think Daughter has a gift
for music. She wants to take piano lessons.
What do you think?” Dad’s first question:
“How much will it cost?” The answer, high or
low, determines Dad’s position.
Sure, Dad’s in favor of Daughter getting
whatever she needs and deserves, but it’s
MONEY that decides.
A Note About Money
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People say they are willing to do anything to have
money.
Some of them prove it.
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They will cheat, lie, steal and embezzle. They will perjure
themselves; defraud friends, partners or employers; marry
for money; divorce for money; and betray their country for
money. They will counterfeit, extort, kidnap and commit
murder – literally go to hell and throw away the key – for
money.
What most people will not do – what they flatly refuse to do
– is muster a little SELF-DISCIPLINE.
It’s Not Money’s Fault
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How did MONEY get so much authority?
How can it wield such power?
MONEY is as inanimate as a brick and has no
behavior of its own.
Money has no demeanor outside your own conduct.
Ralph Waldo Emerson said, “Money can be an
obedient servant, but a harsh taskmaster.”
What money does or does not do is entirely
dependant on you.
If you don’t own your money, money will own you.
When it comes to money, there is no substitute for
self-discipline.
Manage Your Mind
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Always remember:
The goal is accumulation, not just
acquirement.
There are only two laws of accumulation:
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Don’t spend all I earn
Don’t lose what I save
MAGIC OF TIME
– College Students Have Time Advantage of 30
years to become MILLIONAIRES!
$250/Mo = 3,000/Yr Invested
Years Invested
10
30,000
20
60,000
30
90,000
Goal 20%
15%
10%
93,450
70,050
52,590
$3.1 to $1
672,060
353,430
189,00
$11.2 to $1
4,254,780
1,499,880 542,820
That equals:
$47.3 to $1
invested!
What Is A Mutual Fund?
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The theory behind mutual funds is simple:
 You need the advantage of being able to pool your
money together with that of a lot of other investors.
 A professional manager can invest that money across
enough investments to reduce the risk of being
wiped out by any single bad bet.
The fund is essentially a corporation whose sole
business is to collect and invest money.
You join the pool by buying shares in the fund.
Your money is invested by a team of professionals, who
research stocks, and then place the money as wisely as
they can.
How To Choose A Fund For 20%+ ROR?
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At least 3 years history
Does better than S&P 500 Index in up/down markets
 Not a hot fund this year.
Steady management
Does not invest strictly for Value. Growth!
Diversify into mutuals investing:
 In Mid Cap stocks, which are companies with $2-$10 billion
market value (share price x number of shares)
 Large Cap stocks having market values over $10 billion
 Small Cap under $2 billion
Obtain for $1 the Wall Street Journal (WSJ) on the Monday
following the close of each quarter, which has all 10,000 Mutual
http://finance.yahoo.com/
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BUFSX
Or http://www.morningstar.com/
Invest Your Mutual Funds In A Roth IRA
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Roth IRA (no taxes) is a must for you, your spouse and each child
Requirements:
 You can contribute past age 70 ½, and start at any age.
 Adjusted gross income must be below $95,000 single IRS filing
OR $150,000 joint IRS filing (If you make more than this you
shouldn’t be here!)
No income tax ever on withdrawal of principal after 59 ½ age, and
interest earnings after only 5 years of investing
No withdrawal requirements as to when and how much except
beneficiaries must withdraw all in their lifetime
Can name beneficiaries including grandchildren which is generation
skipping and one of few ways to avoid taxes to them.
Maximum contributions allowed $3,000
 Changes to $4,000 in 2005
 Changes to $5,000 in 2008
Invest Your Mutual Funds In A Roth IRA
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Non-taxable withdrawals monthly not touching principal:
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At 10YRS $1,558 (93,450 x .20 /12)
At 20YRS $11,201 (672,060 x .20/12)
At 30YRS $70,913
If you believe you have plenty of financial security, consider if you
live past 100, costly medical expenses and 3.1% inflation in the
past 60 years!
Don’t rely on Social Security or Medicare, which may not be in
existence when you need them.
Call one mutual fund company for application but when it reaches
$100,000 (about age 30) call 800-843-3548 to open a Fidelity
Brokerage or Other Broker, and invest in another mutual for more
diversification.
11 GOLDEN RULES
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You CAN save $8.22/day x 365 = $3,000/year - your 30 year investment
$90,000 worth $4 million @ 20%
The best time to invest is when young, right NOW
20-30 years invested in IRA can be in addition to your 401(k) or other
retirement plans
Look for mutual funds under $10 billion assets & with 3 years annualized
average at least @ 20% Rate of Return (ROR)
Evaluate your mutual funds quarterly
Remember more ROR is more financial independence for your family or for
your charity to afford more programs for their members
Inflation 3.1% over past 60 years reduces future dollar purchasing power
New Prudent Investment Act passed Missouri & Kansas + 30 other states
dictates diversification and investing in today’s market opportunities
Have a reserve of liquid money for emergencies so that you won’t be
forced to sell your mutual funds that are invested for the long term
Patience is a virtue – over time stocks ALWAYS seek new highs in spite of
ups and downs
“Yes, You Can Achieve Financial Independence” book by Jim Stowers,
Chairman American Century Mutual Funds, is the investment bible!