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Making the Most of Your Money Making the Most of Your Money

May May 16 16, , 2009 2009 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 This time it’ ’s different s different 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 Anybody who says there’ ’s safety in s safety in 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 like talking with eight-

• year

year-

• olds about sex
• lds about sex.

. They have heard all the words They have heard all the words, , but they but they haven haven' 't a clue t a clue. . 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 If institution fails, , you will usually have you will usually have 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

• ver the policies
• ver 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 Why did you buy a house, , anyway anyway? ?

Your house will still turn out to be a Your house will still turn out to be a wonderful investment wonderful investment If you If you’ ’re having trouble keeping up with your re having trouble keeping up with your 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 Don’ ’t wait around for the perfect time t wait around for the perfect time 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% 1% lower rate lower rate if you have a fixed rate if you have a fixed rate mortgage mortgage If you have a variable rate If you have a variable rate, , consider a consider a fixed mortgage now fixed mortgage now Don Don’ ’t refinance over a longer period t refinance over a longer period

Safe Money in Tough Times Safe Money in Tough Times

If medical science continues to prolong If medical science continues to prolong human life human life, , some of us may eventually pay some of us may eventually pay

• ff the mortgage
• ff the mortgage.

. Anonymous Anonymous

Safe Money in Tough Times Safe Money in Tough Times It

It’ ’s Time to Get Your Debt Under s Time to Get Your Debt Under Control Control

Don Don’ ’t follow the government t follow the government’ ’s example s example. . 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 When you’ ’re going to start needing the re going to start needing the 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 Example 1 1: : You You’ ’re going to buy a house in re going to buy a house in 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 Example 2 2: : College savings needed in four College savings needed in four 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 Example 3 3: : You You’ ’re going to retire in four re going to retire in four years years Need to tap into money in four years Need to tap into money in four years Money will be needed for Money will be needed for 25 25

• r more years
• r more years

thereafter thereafter Invest in both stocks and interest Invest in both stocks and interest-

• earning

earning securities securities -

• retirees need both income and

retirees need both income and growth to meet rising living costs growth to meet rising living costs

Safe Money in Tough Times Safe Money in Tough Times

I 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 four o four o’ ’clock clock. . Henny Henny Youngman Youngman

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 When the stock market recovers, , it does it does 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

• ut any weaklings
• ut any weaklings

One source for performance information is One source for performance information is www www. .reuters reuters. .com com

Safe Money in Tough Times Safe Money in Tough Times

401 401( (k k) ) and and 403 403( (b b) ) Reminder Reminder

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 amount you’ ’re saving re saving

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 If you’ ’re contributing to your investment re contributing to your investment accounts regularly accounts regularly, , you you’ ’re benefiting from re benefiting from dollar cost averaging dollar cost averaging. . Dollar cost averaging Dollar cost averaging is a winning is a winning 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

Safe Money in Tough Times Safe Money in Tough Times

Safest Safest Places for Money You Places for Money You’ ’re re Going to Need in a Few Years Going to Need in a Few Years

CDs CDs Savings accounts and money market Savings accounts and money market accounts accounts U U. .S S. . Treasury securities and money Treasury securities and money market funds that invest in U market funds that invest in U. .S S. . Treasury Treasury securities securities If you If you’ ’re willing to take a little risk re willing to take a little risk… …

Safe Money in Tough Times Safe Money in Tough Times

Preparing for the Better Times Preparing for the Better Times Ahead Ahead

Stock market rebounds before clear signs Stock market rebounds before clear signs

• f economic improvement
• f economic improvement

Improvement in the housing market is key Improvement in the housing market is key Those who wait will be too late Those who wait will be too late

Safe Money in Tough Times Safe Money in Tough Times

What What’ ’s the Bullish Case for U s the Bullish Case for U. .S S. . Stocks Stocks? ?

Long Long-

• term trend has always been up

term trend has always been up Many smart investors are buying stocks now Many smart investors are buying stocks now

Safe Money in Tough Times Safe Money in Tough Times

The time to buy is when blood is running in The time to buy is when blood is running in the streets the streets. . Baron Nathan Rothschild Baron Nathan Rothschild

Safe Money in Tough Times Safe Money in Tough Times

What What’ ’s a Reliable Signal to Get s a Reliable Signal to Get Back in the Stock Market Back in the Stock Market? ? There is no reliable signal There is no reliable signal

Stock prices rise before there are clear Stock prices rise before there are clear indications of improving conditions indications of improving conditions Best strategy is to Best strategy is to gradually gradually add to your add to your stock holdings stock holdings

Safe Money in Tough Times Safe Money in Tough Times

Where I Where I’ ’m Finding Opportunities m Finding Opportunities

Cash Cash Fixed Fixed Income Income Equities Equities

Safe Money in Tough Times Safe Money in Tough Times

Your Your “ “To Do To Do” ” List List

Find out where you stand Find out where you stand, , but but… … Avoid taking Avoid taking any any precipitous action precipitous action Don Don’ ’t look in the rearview mirror t look in the rearview mirror A decade from now A decade from now, , 2008

2008 and

and 2009

2009

will will be just an unpleasant memory be just an unpleasant memory