Financial Literacy Begins with You! - PowerPoint PPT Presentation

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Financial Literacy Begins with You!

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  1. Kathy Floyd Office of Investor Education and Advocacy Louisiana Youth Financial Educators’ Summit September 28, 2010 Financial Literacy Begins with You!

  2. SEC Disclaimer • The Securities and Exchange Commission, as a matter of policy, disclaims responsibility for any private publication or statement by any of its employees. The views expressed in this presentation do not necessarily reflect the views of the SEC, its Commissioners, or other members of the SEC’s staff.

  3. Five Key Messages for Students • Manage your Wealth • Set a Financial Goal • Over the long-run, Stocks • Diversification • Compound Interest

  4. Students should know: • They are responsible for accumulating and managing their own wealth

  5. Financial Goals • Set a Financial Goal • Short Term, Medium Term, Long Term • Understand Your Risk Tolerance

  6. Rates of Return • Treasury Bills 3.7% • Long-Term Treasuries 5.4% • Long-Term Corp. Bonds 5.7% • Large Co. Stocks 9.6% • Small Co. Stocks 11.7% • Compound Annual Rates of Return* 1926 – 2008 • * Nominal

  7. Diversification • Certificates of Deposit • Money Market Funds • Treasuries (Bills, Notes, Bonds, TIPS) • Bonds • Mutual Funds • Exchange Traded Funds (ETFs) • Stocks • Diversification

  8. Compound Interest • At age 20, you start • investing $2000 a year • at 8%. But you stop • after 10 years. • At age 40, your friend • starts investing $2000 • a year at 8% and keeps • investing until you’re • both 65.

  9. Who comes out a head? • You! • You have • $462,647 • Your friend has • only $157,908

  10. Five Key Messages for Teachers • Never too late to save for retirement • Know your risks • Indentify Fees • Understand your options • Fraud can happen to you

  11. Did you know? • 58% of Americans have not calculated their retirement needs • Source: FINRA Investor Education Foundation • National Financial Capability Study • December 7, 2009

  12. Did you know? • 4 out of 10 cash out their retirement plans when changing jobs (leakage) • Source: GAO Report – October 28, 2009 • GAO-10-153T 401K Plans

  13. Know your risks • Volatility • Purchasing Power/Inflation • Business Specific • Interest Rate • Accumulation

  14. Understand Fees • Per Transaction Beware inactivity fees • Assets Under Management As your wealth increases, their revenue increases • Mutual Fund Fees How are you being paid for this transaction?

  15. Understand your Options • Ask Questions… • Is this product registered with the SEC or my state regulator? • Why is this investment suitable for me? • How will this investment make money? (Dividends? Interest? Capital gains?) • What are the total fees? • How do I liquidate this product?

  16. Avoid Fraud • 70% of Investors have not checked if their investment professional is registered • Source: FINRA 2007 survey (http://www.saveandinvest.org/web/groups/sai/ • @sai/documents/sai_original_content/P036702.pdf)

  17. Research, Research, Research • Check out Brokers and Investment Advisers Call State Regulators, visit www.nasaa.org Call FINRA at 1-(800) 289-9999 or visit FINRA’s Broker Check atwww.finra.org Guidance from the SECwww.sec.gov/investor/brokers.htm SEC Investment Adviser Public Disclosure page:www.adviserinfo.sec.gov 17

  18. Fraud Can Happen to You! • Fraud Types • Newsletters • On-line Fraud • “Free” Lunch • Pump & Dump • Pyramid/Ponzi Schemes • Affinity Fraud • Red Flag Sales Techniques

  19. Investor.gov

  20. SEC contact information • Website: WWW.SEC.GOV • Toll free number: 1-(800) 732-0330 • Mail: U.S. Securities and Exchange Commission • 100 F Street NE • Washington, DC 20549 • Name: 202-551-6394 • Floydk@sec.gov