Polsky Personal Investing Method

Slides by: Andrew, Ryan, Mitch & Slides by: Andrew, Ryan, Mitch & TrentTrentStudents In Free Enterprise (SIFE)Students In Free Enterprise (SIFE)

Norman & Elaine Polsky Family Supporting Foundation

LESSONS FOR LIFE are not being LESSONS FOR LIFE are not being taught in colleges – you are preparing taught in colleges – you are preparing for your future through a college for your future through a college degree but NOW you should begin degree but NOW you should begin protecting your own future by NOT protecting your own future by NOT depending on government Social depending on government Social Security or Medicare and employer’s Security or Medicare and employer’s 401(k).401(k).

OBJECTIVES:OBJECTIVES:OBJECTIVES:OBJECTIVES: To encourage fellow students in all To encourage fellow students in all

disciplines to start NOW their Roth IRA.disciplines to start NOW their Roth IRA. To continue investing monthly to become To continue investing monthly to become

financially independent past the age of financially independent past the age of 100. 100.

Attain self-sufficiency and to be able to Attain self-sufficiency and to be able to make a difference in helping not-for-make a difference in helping not-for-profits (i.e. SIFE) by contributing their profits (i.e. SIFE) by contributing their money and time by being active on money and time by being active on boards of directors and other services.boards of directors and other services.

Why Is This Important To Why Is This Important To Me?Me?

It always seems to come down to MONEY.It always seems to come down to MONEY. Mom says to Dad, “I think Daughter has a Mom says to Dad, “I think Daughter has a

gift for music. She wants to take piano gift for music. She wants to take piano lessons. What do you think?” Dad’s first lessons. What do you think?” Dad’s first question: “How much will it cost?” The question: “How much will it cost?” The answer, high or low, determines Dad’s answer, high or low, determines Dad’s position. position.

Sure, Dad’s in favor of Daughter getting Sure, Dad’s in favor of Daughter getting whatever she needs and deserves, but whatever she needs and deserves, but it’s MONEY that decides.it’s MONEY that decides.

A Note About MoneyA Note About Money

People say they are willing to do anything to People say they are willing to do anything to have money. have money.

Some of them prove it. Some of them prove it. They will cheat, lie, steal and embezzle. They will They will cheat, lie, steal and embezzle. They will

perjure themselves; defraud friends, partners or perjure themselves; defraud friends, partners or employers; marry for money; divorce for money; and employers; marry for money; divorce for money; and betray their country for money. They will counterfeit, betray their country for money. They will counterfeit, extort, kidnap and commit murder – literally go to extort, kidnap and commit murder – literally go to hell and throw away the key – for money. hell and throw away the key – for money.

What most people will not do – what they flatly What most people will not do – what they flatly refuse to do – is muster a little refuse to do – is muster a little SELF-DISCIPLINE.SELF-DISCIPLINE.

It’s Not Money’s FaultIt’s Not Money’s Fault How did MONEY get so much authority?How did MONEY get so much authority? How can it wield such power?How can it wield such power? MONEY is as inanimate as a brick and has no MONEY is as inanimate as a brick and has no

behavior of its own. behavior of its own. Money has no demeanor outside your own Money has no demeanor outside your own

conduct.conduct. Ralph Waldo Emerson said, “Money can be an Ralph Waldo Emerson said, “Money can be an

obedient servant, but a harsh taskmaster.” obedient servant, but a harsh taskmaster.” What money does or does not do is entirely What money does or does not do is entirely

dependant on you.dependant on you. If you don’t own your money, money will own you.If you don’t own your money, money will own you. When it comes to money, there is no substitute When it comes to money, there is no substitute

for self-discipline.for self-discipline.

Manage Your MindManage Your Mind Always remember:Always remember: The goal is The goal is accumulationaccumulation, not just , not just

acquirement.acquirement. There are only two laws of There are only two laws of

accumulation:accumulation: Don’t spend all I earnDon’t spend all I earn Don’t lose what I saveDon’t lose what I save

MAGIC OF TIMEMAGIC OF TIME– College Students Have Time Advantage of – College Students Have Time Advantage of

30 years to become MILLIONAIRES!30 years to become MILLIONAIRES!

YearYearss

InvesteInvestedd

Goal 20%Goal 20% 15%15% 10%10%

1010 30,00030,000 93,45093,450

$3.1 to $1$3.1 to $170,05070,050 52,59052,590

2020 60,00060,000 672,060672,060

$11.2 to $1$11.2 to $1353,430353,430 189,00189,00

3030 90,00090,000 4,254,7804,254,780

That equals:That equals:

$47.3 to $1 $47.3 to $1 invested!invested!

1,499,881,499,8800

542,820542,820

$250/Mo = 3,000/Yr Invested$250/Mo = 3,000/Yr Invested

What Is A Mutual Fund?What Is A Mutual Fund? The theory behind mutual funds is simple: The theory behind mutual funds is simple:

You need the advantage of being able to pool You need the advantage of being able to pool your money together with that of a lot of other your money together with that of a lot of other investors.investors.

A professional manager can invest that money A professional manager can invest that money across enough investments to reduce the risk of across enough investments to reduce the risk of being wiped out by any single bad bet. being wiped out by any single bad bet.

The fund is essentially a corporation whose sole The fund is essentially a corporation whose sole business is to collect and invest money.business is to collect and invest money.

You join the pool by buying shares in the fund.You join the pool by buying shares in the fund. Your money is invested by a team of professionals, Your money is invested by a team of professionals,

who research stocks, and then place the money as who research stocks, and then place the money as wisely as they can. wisely as they can.

How To Choose A Fund For 20%+ How To Choose A Fund For 20%+ ROR?ROR?

At least 3 years historyAt least 3 years history Does better than S&P 500 Index in up/down marketsDoes better than S&P 500 Index in up/down markets

Not a hot fund this year.Not a hot fund this year. Steady management Steady management Does not invest strictly for Value. Growth!Does not invest strictly for Value. Growth! Diversify into mutuals investing:Diversify into mutuals investing:

In Mid Cap stocks, which are companies with $2-$10 In Mid Cap stocks, which are companies with $2-$10 billion market value (share price x number of shares) billion market value (share price x number of shares)

Large Cap stocks having market values over $10 billionLarge Cap stocks having market values over $10 billion Small Cap under $2 billionSmall Cap under $2 billion

Obtain for $1 the Wall Street Journal (WSJ) on the Monday Obtain for $1 the Wall Street Journal (WSJ) on the Monday following the close of each quarter, which has all 10,000 following the close of each quarter, which has all 10,000 Mutual Mutual

http://finance.yahoo.com/http://finance.yahoo.com/ BUFSXBUFSX

Or Or http://www.morningstar.com/http://www.morningstar.com/

Invest Your Mutual Funds In A Roth Invest Your Mutual Funds In A Roth IRAIRA

Roth IRA (no taxes) is a must for you, your spouse and each Roth IRA (no taxes) is a must for you, your spouse and each childchild

Requirements:Requirements: You can contribute past age 70 ½, and start at any age. You can contribute past age 70 ½, and start at any age. Adjusted gross income must be below $95,000 single IRS Adjusted gross income must be below $95,000 single IRS

filing OR $150,000 joint IRS filing (If you make more than this filing OR $150,000 joint IRS filing (If you make more than this you shouldn’t be here!)you shouldn’t be here!)

No income tax ever on withdrawal of principal after 59 ½ age, No income tax ever on withdrawal of principal after 59 ½ age, and interest earnings after only 5 years of investingand interest earnings after only 5 years of investing

No withdrawal requirements as to when and how much except No withdrawal requirements as to when and how much except beneficiaries must withdraw all in their lifetimebeneficiaries must withdraw all in their lifetime

Can name beneficiaries including grandchildren which is Can name beneficiaries including grandchildren which is generation skipping and one of few ways to avoid taxes to them.generation skipping and one of few ways to avoid taxes to them.

Maximum contributions allowed $3,000 Maximum contributions allowed $3,000 Changes to $4,000 in 2005 Changes to $4,000 in 2005 Changes to $5,000 in 2008Changes to $5,000 in 2008

Invest Your Mutual Funds In A Roth IRAInvest Your Mutual Funds In A Roth IRA

Non-taxable withdrawals monthly not touching principal: Non-taxable withdrawals monthly not touching principal: At 10YRS $1,558 (93,450 x .20 /12)At 10YRS $1,558 (93,450 x .20 /12) At 20YRS $11,201 (672,060 x .20/12)At 20YRS $11,201 (672,060 x .20/12) At 30YRS $70,913At 30YRS $70,913

If you believe you have plenty of financial security, If you believe you have plenty of financial security, consider if you live past 100, costly medical expenses and consider if you live past 100, costly medical expenses and 3.1% inflation in the past 60 years!3.1% inflation in the past 60 years!

Don’t rely on Social Security or Medicare, which may not Don’t rely on Social Security or Medicare, which may not be in existence when you need them.be in existence when you need them.

Call one mutual fund company for application but when it Call one mutual fund company for application but when it reaches $100,000 (about age 30) call 800-843-3548 to reaches $100,000 (about age 30) call 800-843-3548 to open a Fidelity Brokerage or Other Broker, and invest in open a Fidelity Brokerage or Other Broker, and invest in another mutual for more diversification.another mutual for more diversification.

11 GOLDEN RULES11 GOLDEN RULES You CAN save $8.22/day x 365 = $3,000/year - your 30 year You CAN save $8.22/day x 365 = $3,000/year - your 30 year

investment $90,000 worth $4 million @ 20%investment $90,000 worth $4 million @ 20% The best time to invest is when young, right NOWThe 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 20-30 years invested in IRA can be in addition to your 401(k) or other

retirement plansretirement plans Look for mutual funds under $10 billion assets & with 3 years Look for mutual funds under $10 billion assets & with 3 years

annualized average at least @ 20% Rate of Return (ROR)annualized average at least @ 20% Rate of Return (ROR) Evaluate your mutual funds quarterlyEvaluate your mutual funds quarterly Remember more ROR is more financial independence for your family Remember more ROR is more financial independence for your family

or for your charity to afford more programs for their membersor for your charity to afford more programs for their members Inflation 3.1% over past 60 years reduces future dollar purchasing Inflation 3.1% over past 60 years reduces future dollar purchasing

powerpower New Prudent Investment Act passed Missouri & Kansas + 30 other New Prudent Investment Act passed Missouri & Kansas + 30 other

states dictates diversification and investing in today’s market states dictates diversification and investing in today’s market opportunitiesopportunities

Have a reserve of liquid money for emergencies so that you won’t be 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 termforced to sell your mutual funds that are invested for the long term

Patience is a virtue – over time stocks ALWAYS seek new highs in Patience is a virtue – over time stocks ALWAYS seek new highs in spite of ups and downsspite of ups and downs

““Yes, You Can Achieve Financial Independence” book by Jim Stowers, Yes, You Can Achieve Financial Independence” book by Jim Stowers, Chairman American Century Mutual Funds, is the investment bible!Chairman American Century Mutual Funds, is the investment bible!