DIVISION OF FIRMS - National Association of Black Accountants

National Association of Black
Accountants, Inc.
M ney $ense
What is investing?
Money set aside for future income,
benefit or profit to meet long term
Saving and Investing: The Difference
Investing is earning a return on your money
Saving is to put aside or reserve
Why Invest?
Best Ways to Invest
Get in the habit of saving. You must set
aside a portion of your income as often as
Invest in financial markets so your money
can grow at a meaningful rate.
Ignore short-term price fluctuations, and
focus on long-term potential.
Best Ways to Invest
Ask questions and become educated before
making any investment.
Invest with your head, not with your
stomach or heart. Avoid the urge to invest
based on how you feel about an investment.
Before you Start
Organize your finances
Understand the impact of time
Time Value of Money
The relationship between time, money, and rate of
return(interest), and their effect on earnings
Time Value of Money
Suppose your relative owed you $500. Would you rather
have this money repaid to you right away, in one
payment, or spread out over a year in four installment
payments? Would it make a difference either way?
You would probably be better off getting your money
right away, in one payment. You could invest this
money and earn interest on it or you could use this
money to pay off all or part of a loan.
Time Value of Money
The time value of money refers to the fact
that a dollar in hand today is worth more than
a dollar promised at some future time.
 A dollar in hand today can be invested in an
interest-bearing account that would grow in
value over time.
 The trade-off between money now and
money later depends on, among other things,
the rate of interest you can earn by investing.
Opportunity Cost
Opportunity cost: the cost of any decision includes the
cost of the best forgone opportunity.
If you pay $50.00 for a concert ticket, your cost of attending
the concert is not just the ticket price, but also the time and
cost of what else you might have enjoyed doing instead of
going to the concert.
Applying this concept to the $500 owed to you, you see that
getting the money in installments will saddle you with
opportunity cost. By taking the money over time, you lose the
interest on your investment or any other use for the initial
$500, such as spending it on something you would have
enjoyed more.
Key Investment Principles
The power of compound interest
Rule of 72
Developing An Investment Strategy
Purpose for Investment
 Retirement
 Education
 Wealth Accumulation
 Supplemental Income
Investment Options
Financial Advisors
Measuring Effectiveness
Investing for Wealth
Planning for wealth
Make the most of a 401(K)
Investing in Your Future
Asset allocation is ongoing
 Diversification
 Life circumstances
 Investment goals, timeframe and tolerance
Investing in Your Future
Asset Allocation
 Stocks
 Bonds
 Cash Equivalents
Investing in Your Future
Long-Term Investments
 Mutual Funds
 Stock
 Bonds
Investing in Your Future
Retirement Specific Investments
 401(k)
 Social Security
Monitoring Investments
Set Attainable Goals and Objectives
Periodically Assess
Be Prepared to Change Course
Do Not Procrastinate
Seek Assistance
Financial literacy isn’t just
a matter of knowing what you
have and knowing your options.
It is a matter of planning for
life’s milestones.
Thank You!
National Association of Black Accountants, Inc.
M ney $ense
For more information visit www.nabainc.org
360 Degrees of Financial Literacy
360 Degrees of Financial Literacy is a national effort of the CPA
profession to improve the financial understanding of Americans.
It provides a comprehensive approach to financial education,
focusing on the information Americans need at every life stage,
from childhood to retirement. CPAs volunteer their time and
expertise to educate members of their communities about
financial issues.
Visit www.360financialliteracy.org for tools to help you make
sound financial decisions.

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