 All right, so a couple of things about me. I'm super passionate about just understanding finance and educating about finance. And the other thing is I speak really fast. So I already know that it's just a flaw of trying to speak slower. So I apologize. We're gonna try to cover a lot of stuff today. Want to put this out there right now. We're not gonna answer all your questions today. I got an hour and a half. I could talk to this for days. So it's an intro. Hopefully everybody that's out there is gonna get something from this. So we're gonna talk a little bit about vehicle, investment vehicles. We're gonna talk about different accounts you can invest in. We're gonna talk about how to invest in stocks or bonds or web three or different things. So hopefully there's something for everybody, but I can tell you right now, there's gonna be things that maybe a couple of slides where you're bored, but you're super excited about other ones. With the broad audience, we need to try to cover everything. So hopefully you're as excited as I am for today. I've been doing this professionally for about 20 years. We have clients in about 15 different states at this point. I've been doing analytical and I've been studying the stock market since I was 12. My grandfather was very adamant that that was something that we learned about. So I'm very excited about sharing that knowledge with you. So a couple fun facts, the stock market was actually founded in 1792. Why I like to bring that out is that it's been around for a long time. So we think of it, well, maybe it was early 1900s or this is a question if we're in person, I usually ask when do folks think the stock market was founded and it's been around for a very long time. And the first companies that were ever ever listed were US banks out of New York, which is just kind of like a fun fact there. I always try to start with something that's kind of like a trivia type of question. But we're gonna talk more about the stock market. We're also gonna talk about real estate investments and web three investments and other things. So don't think this is just about the stock market today. When we're talking about investing, there's a lot of things you can invest in. And the important thing as you'll hear is about having a process in place, following that process and understanding what you personally are comfortable, not what your neighbors are comfortable with, not what somebody tells you should be comfortable with. So with no further ado, we're gonna move forward here. I'm going to, and let me get, hold on. I think you see something that you should, there we go. We're gonna talk about this briefly. If you attended the assessment that I did on February 2nd, we talked about things like budget, net income, credit score, savings, tax, and then finally investing. So don't wanna spend a ton of time on this because this will be a repeat for those of you that attended on February 2nd. But the big thing to take away from this slide is the fact that there's certain things you wanna do before you ever start investing. Too many people start investing because it's fun, it's exciting. There's an adrenaline rush, it's fun to talk about my own Apple, that sort of thing, or I own this piece of art or I bought this land in the Metaverse, or whatever it happens to be what you're looking to invest in. But if you're really looking to invest for a goal or purpose and not just gambling, it's important that you have a budget in place. I don't care if it's an Excel spreadsheet or you use a program like Mint or you use your credit card programs. There's a lot of credit cards these days, use programs that will do a budget for you. I don't care, have a budget so you know that how much you're spending, know if you're in the red or black every month, know what your net income is, which is your income after taxes. So if you get paid on a grant or a stipend or you're doing things as your own business owner, a lot of college kids have like a part-time job tutoring or something of that nature, you're gonna owe taxes. So if you're not having a W-2 type of job where they're taking taxes out automatically, you're gonna have to help calculate taxes. And then talking about credit score, the use of good debt versus bad debt. Credit cards are usually bad debt. Good debt could be something like a mortgage or a home loan because those are appreciating values. Real estate is appreciating assets, not a depreciating asset. So we talked a little bit about appreciating assets, depreciating assets. And I joke around about consuming assets because I have two kids, right? Like kids are, they consume my assets but they appreciate also, right? They give us something in return, so. But in all seriousness, understanding, and if you're taking on debt to acquire something that is gonna appreciate, it's usually something that we consider good debt. So that's why a good credit score is important and what goes into those credit score factors. So don't wanna repeat that. If you have questions about credit score, you can circle back with me. I'll provide my email address and happy for you to circle back with me later. Savings, having a three to six months depending on your situation, kind of safety net set aside. And again, these are all things we wanna do before we even put $1 in any kind of investment that you're looking to do. So you have three, six months set aside that if any emergency comes up, it keeps you from getting into a debt cycle that is very hard to get out of. I equate a debt cycle into quicksand. You get into it, it's hard to get out of, especially if it's a credit card debt or those non back loans. So if you don't have anything to collateralize, you're gonna have higher interest rates and there's all these little loopholes that you need to do to pay those things off. So if you have three to six months set aside, you have that emergency fund. And I can't stress that enough that that is very important that you have that emergency fund set aside. So without further ado, we'll kind of get into the meat and potatoes. And I guess I should say a little bit about the company I work for too, just to give an idea of what we've done and kind of skipped over that a little bit. I own Darden wealth group and we do a lot about investing and preaching about investing. I said a little bit, it was my passion, but it's also my company's passion. So we are a team of individuals that, not only do we act as a modified family office for our clients, but we also are very passionate about, talking to anybody that will really listen. And on the first slide, you saw some of the media outlets that we've been featured in. So let's talk about here, a couple of different investment vehicles that people think about when we talk about investing. So one being the market, blah, blah, blah. We talked about how the stock market was founded, that fun fact that we started with real estate. Some people prefer real estate investing. And it's because it's tangible property that they can touch, that they can go there, they can see stock market, it's all on the computer these days. We no longer send out certificates that say, here's a certificate for the 5,000 shares of Apple that you own, you actually go and you touch the property that you're investing in. So some people like that, same thing with commodities, they can hold gold bars, they can touch the artwork that they invest in, that sort of thing. So some people appreciate that, especially in times of volatility in the market, a lot of people turn to real estate commodities because again, it's something that they can physically hold and appreciate and know they own something that hopefully will appreciate in value. Currency, most of the time, even though gold can be a currency, when we talk about currency, we're talking about the dollar or the pound or the won or different currencies there. And so you can also diversify in currency investments and hedge the dollar, right? And when you're hedging dollar, it could be inflation in this country. There's a lot of talk about inflation right now because we've seen a 7% jump in inflation and how that affects your buying power, which means if you bought a gallon of milk a year ago versus today, it's gonna be 7% more expensive today. So it's important that you consider these things when we're talking about investing. And Web3, Web3 has come up very recently. Web3, I'm sure you guys are probably more familiar than Web3 than a lot of people my age and above, but Web3 is your metaverse, your cryptocurrencies, your NFTs, and so that's come up and we want to talk a little bit about the pros and cons investing in that Web3 space as well. So when we're talking about investing, let's talk about breaking things down because it's important that you understand the fundamentals of investing and not just jump right in and start buying whatever is attractive to you. So let's talk about the type of accounts first that you can invest in. Then we're gonna talk and really flesh out those common investment vehicles. We kind of went over broad categories on the previous slide. Now we're going to really flesh that out and look at common investment vehicles. Again, it's not gonna cover everything. There's gonna be things that we don't talk about today but in the interest of time, we're gonna talk about the common one. So the ones that most people think about when they talk about investing. And then finally, a disciplined approach. The disciplined approach is very important even though it's listed last, I almost wanna list it first and last on this slide just because success is going to depend on how disciplined you are as an investor. No matter if you think of yourself as a not emotional person, studies have shown that there's a lot of emotion when it comes to your finances and greed, hope and fear. I always tell people, greed, hope and fear control the market. So either understanding that the market is being controlled because other people are experiencing those three emotions or you yourself are experiencing those three emotions. Understanding that is a huge step in the right direction and then creating a disciplined approach to help mitigate those three emotions is very important. So let's start with the types of accounts. So at the beginning, you have your taxable accounts and tax deferred accounts. It's the two basic categories that it's important to understand. Taxable accounts are, you get paid and you have money left over and after you have your safety net, you put extra money into an account and you start investing or you buy a piece of art with that after tax money, any gains on that, you sell that piece of art, you sell that stock, you sell that cryptocurrency, you have gains on it, you pay taxes on it. Right now under current tax code, for most people you're paying 15% on those gains and we'll do a slide just to reiterate what that looks like and how that works a little bit later. Tax deferred are certain investment vehicles you can put money into and it comes off of the top of your income. So if you make $100,000 a year, you put $15,000 in one of these preferred vehicles. Your taxable income drops to $85,000. So you can see why that's a benefit. You pay less taxes, more money in your pocket and then you get to invest more money. So that $15,000 goes in in its entirety to this vehicle. We're also gonna talk about Roths, which means you put in money after tax but it's also gross tax-free. So one thing that we'll get to and I introduce it later just because it's important to understand first the term taxable versus tax deferred. And then there's also a third category that's actually tax-free that I'll introduce a little bit later and those are your Roth IRAs for those that are a little bit advanced in investing. So capital gains, I promise I'd flesh this out a little bit more. It's the price in which a stock or a mutual fund was purchased or again, insert cryptocurrency, real estate, whatever. Sales proceeds minus the cost basis equals the capital gain or loss. And again, tax at 15%. So fun example, Apple stock bought at 120, sold at 148, gains $28, 15% tax and that proceeds as $23.50. So why is this important? Going back to the second slide I had right after my name, probably the first most important one, right? When we said what your foundation is, is understanding tax. So there isn't like an employer that helps send tax to the federal government when you sell a security. So if you sell something at a gain, it's important that you set aside money. So at the end of the year, when you file your taxes, you have money to pay those capital gains. So if you reinvest 100%, know that you're gonna, and you don't have any other cash, you're gonna have to liquidate or dip into your savings account or safety net to pay those capital gains. So it's important for if you're making trades during the year to know that the tax man cometh, right? As they say. Or if you have a loss, the fun fact too is that you can take losses against gains. So if you have $100,000 of losses and $100,000 of gains, they can offset each other. There is another, and I don't wanna get in too many of the nuances, but kind of the important things to remember is there's also long-term capital gains and short-term capital gains. So long-term capital gains are positions that you held over a year, short-term capital gains is under a year. Why they're differ is the fact that short-term capital gains are taxed at ordinary income rates, long-term capital gains are taxed at that 15% that we talked about and traditionally thought about. When people think about capital gains, they usually think of 15%. However, like everything else in the IRS code, there's always a loophole, which means, or asterisk, which is if you hold a position less than a year, it's short-term. So short-term may not matter. If you're not making a lot of money and your tax bracket is 10%, then maybe it's less, maybe less. However, for most people, when we talk about ordinary income, it usually means that you're paying more than that 15%. You're getting a discount on that for capital gains being taxed at 15%. So let's go into these tax deferred counts a little bit more. And here's where we introduce Roth IRAs. And I like Roth IRAs. So I definitely wanna break it down so it's understandable, but I also wanna make sure that we understand what the difference between a traditional IRA and a Roth IRA. So again, tax deferred accounts are accounts that reduce your taxable base in day one, and you don't pay taxes on them until you take it out. Now, we're gonna talk a little bit about when you can take it out, which is gonna be at retirement, 59 and a half. So that's another key piece of that. So if you're investing, if you take it out before 59 and a half, there will be a penalty, which is 10%, plus you still have to pay your ordinary income. So in tax deferred accounts, when you take it out, the tax men come eventually. The idea is if we go back to this chart here, you can see if you have more and the power of compound interest, if you've ever heard that, you start out with more, you can grow to more before you have to start taking it out. And the idea also is in retirement, your tax bracket is gonna be less than what you're working. So if you were to put money in now, and your tax bracket maybe is a little higher, but when you retire, it's gonna be a little bit lower. That may not be true because I think a lot of you may be students or there may be some folks that are working and that may be true. So that's why I want to spend a little bit more time on Roth IRAs because for many of you that might have a lower tax bracket, now you have a great opportunity to put money in, pay taxes now and grow it tax-free. So let me move forward to the slide and not get too ahead of myself and talk about, again, let's drill down a little bit more in these types of accounts. I break it into two different buckets. Your employer-sponsored plans, which is your 401Ks, 403Bs, 457 plans, deferred compensation plans that employers offer or your individual retirement account. So if you get money from tutoring or something that doesn't have an employer-sponsored plan, you have the ability to open up an IRA. And if you form an S corp or a C corp or an LLC or sole proprietorship, you have the ability to open up a small business plan even. So there's two different types of individual retirement accounts if your employer doesn't offer you a plan. And that's the traditional on Roth IRAs. Again, both of them grow tax-deferred. One, you put in after-tax money and never pay taxes again. One, you put in before-tax money but have to pay taxes when you take it out 59.5 ideally. Small business plans are these abilities to kind of form your own retirement plan if you are self-employed. And self-employed, again, can be as simple as I'm tutoring but I don't have a boss. I'm putting myself out there and I'm tutoring individuals. I'm mowing grass, I'm cleaning houses, something of that nature. And you have the ability, there's different types of limits there anywhere from $13, $15,000 in different age limits. So if you are doing some of those things and interested in putting money away and are able to do so because you have the room and your budget to put money away, then you can Google some of these plans, you can reach out to me, you can reach out to a financial advisor, you can call somebody like Fidelity and they can direct you in the right direction of how to open a small business plan. Or if it's something you wanna do very simply and say, okay, I don't have that much to put away, traditional or just a simple Roth IRA probably makes a lot of sense. So kind of reviewing the contribution limits to these things, you can see where just a traditional IRA, very simple to open up, you go online, type in your information, boom, they give you an IRA these days. It's as simple as it is and you can put up to $6,000 away annually. You have a catch-up contribution if you're over 50, you can see that of extra 1,000 bucks. Your 401Ks, your 403Bs, 20,500 or 27,000 if you're over the age of 50 here. The sooner you can invest, I'm sure a lot of you have heard, the better off you are because, again, power of compound interest over tech. So traditional versus Roths, I promised we'd flush this out. Again, before tax money, tax deferred withdrawals of tax and ordinary income, but they do have requirement distribution. So I've talked about bullets one, two, and three on both the Roth IRA and traditional IRA. We have not talked about what an required minimum of distribution is. So I introduced the term 59 or the age 59 and a half, which means that any money that you take out before then you can have a penalty on because these are retirement accounts for your retirement. And I don't care if that you're 19 years old, eventually you wanna start working. So it's never too early to invest for retirement. And as we go on, we're gonna talk about also how we invest for other goals. So we're starting with retirement only because a lot of folks, especially when you're younger, don't necessarily have goals, know where they're gonna be five years from now. But a goal that we all have is someday we hope to stop working. So let's start there. So if you don't know what to invest for and you do have extra money, starting with retirement helps. So let me talk about required minimum distribution. So the government always wants their money. So there is a period of time if you don't need the money by age 72, the government forces you to take money out because they wanna get taxes. So if you have a traditional IRA, when you reach 72 and if you're not working anymore you need to take money out of those accounts. The benefit of a Roth, because you pay tax upfront, you don't have a required minimum distribution. I promise you you never had to pay tax that again. Under current tax law, you don't have to pay tax that again. So again, another benefit for a Roth. So if you're trying to decide, do I invest in a traditional IRA or Roth IRA or maybe you have a traditional 401K versus the Roth 401K, which one do I invest in? Time is always your friend. And again, look at your tax bracket. If you are in a high tax bracket, Roth may not make as much sense because you're not getting the tax benefit now and chances are you're gonna be in a lower tax bracket when you retire. But if you're on a lower tax bracket now, putting money into Roth does make a lot of sense. Let's pay tax now, longer time for it to grow and then you never have to pay taxes again. We have the taxes in this country now are some of the lowest rates that we've ever seen. So if I was, you know, betting whether or not the tax rates in the future to possibly go up or go down farther, my thought process would be that it's, if I'm hedging anything that they're probably gonna go up. So again, it makes sense to consider whether a traditional or Roth makes sense is a couple of rules of thumb of what may tilt your decision in one way or the other. But there's also Roth calculators these days on the web. The web is great, right? If you know what to look for, you guys know this better than I do. But there are traditional versus Roth IRAs. You put it in there, put in your tax bracket. If you know what your tax bracket is, SMART asset has a great federal tax calculator. So if you don't know what your taxes are or the bracket you're in is you can go in there, say, okay, I make this amount of money. I'm single or I'm married or I have dependents. I don't have dependents. This is probably my tax bracket estimated that I'll be in. You can take that value and say, okay, go to the traditional versus Roth calculator and say, which makes the most sense for me. A little bit of legwork there, but again, makes a lot of sense. And again, the one that I like to use, I think it's the easiest, there's other ones out there is SMART asset. Investment vehicle. So once you've decided what kind of investment vehicle, I'm sorry, investment account you wanna open, whether it's a tax deferred or a taxable. Just to go back and probably clarify there because a question is probably gonna come up. Should I start with a tax deferred or a taxable investment vehicle? If you don't need the money, don't foreseeable in the foreseeable future and think that you can put that money away for retirement and not touch it, then start with the retirement side. If it's something that you think you'll need, like I wanna use this money eventually to buy a house, I need this money to buy a car, that sort of thing, then it's something that you can't wait till 59 and a half to pull it out and you're gonna wanna start with a taxable. Make sure your short-term goals aren't sacrificing your long-term goals because obviously if a goal is to buy a car, there's a wide range between a $20,000 car and $100,000 car. So, there's that saying that every action has an equal and opposite reaction. So, there's no right answer and we're gonna talk about this a little bit later for having a financial plan and it's your financial plan. Would you're comfortable in having? There isn't, again, the right thing to do. If you wanna work into, say, longer and I'm not saying that you would have to, but maybe your plan says I'd have to work until age 70 but I can buy that $100,000 car now and you're happy with that because you're gonna get quality of life from owning that car and personal fulfillment. That's great, somebody else might say, my goal is to retire by 40 and I'm gonna drive $5,000 used cars and I'm okay with that. That's their choice and they get quality of life off of that. Again, don't make your financial plan based on somebody else. So, let's talk a little bit about investment vehicles and what we can invest in. So, stock market, some of those common investment vehicles are stocks, employee stock options. I bring that up because a lot of you as you graduate are gonna get offers for employee stock options and you'll get to decide if you're lucky or maybe not so. I mean, sometimes this is a confusing question. Do I take a less salary with employee stock options or greater salary? And again, that's a personal decision. How comfortable am I with risk? And we'll talk about that a little bit. But mutual funds, we'll go over what mutual funds are, index funds, exchange traded funds, bonds, real estate investment trust. Don't feel bad if you don't know what I'm talking about. I've never heard these terms before. We're gonna go over them. Real estate, there's rental properties, there's second homes or there's things called REITs that you can see is kind of an overlap from what's in the market. So, they trade on the market but they're actually backed by real estate. So, there's some overlap there. Same thing, you'll see some overlap with the market and commodities. You could actually buy physical art, coins, gems, agriculture products, raw materials, wheat futures like that, wine. You can actually buy wine to invest in that and certain wines appreciate in value, currencies. We usually think of money outside the US when we talk about currencies. And web three, something relatively new is your metaverse, your crypto, your NFTs. And again, some of these are gonna have overlaps, right? You can buy real estate in the metaverse. You can, there are certain exchanges and ETFs that trade on the market that gives you some exposure to web three while also investing in the market. So, we're gonna talk a little bit about diversification and why diversification is important and allocation. When you start with smaller amount of money, some of these vehicles that give you more diversification in one product might be attractive to you because it allows you to have exposure to the market and web three or market and real estate or market and commodities at the same time. So, why invest in the stock market? So, we're gonna focus a little bit on stock market to start with. When you looked at a 40 year look back of entry year declines, average pullback has been 13% but 75% of the time the market has ended positive. So, when you look at what's happened over time there's a thought process or the saying that stock market always goes up. Part of it is that the fundamental belief that capitalism is always out there to make more money. If a company's main purpose is to make more money then the value of the stock that you hold is always going to appreciate. And that's why we see the stock market go up. Now, if there's questions about the structure of the market and inflation and politics and everything else that may play into that and that's for another conversation. Again, this is like investments 101. So, I know that there's some arguments of how can something go off perpetuity and so forth and that's probably a philosophical question for not for today if you wanna have that conversation. I love having these conversations reach out to me and happy to have those. But for the most part, I used to teach statistics at a master's level. The statistics show 75% of the time the market's gone up. Oops, excuse me, we're on the slide. I went backwards and so forward. So stocks, what are stocks? So, for investing in the market you have these things called stocks and there's also something called the bond market. So really when we're talking about the market investments we have stock investments and we have bond investments. So starting with stock investments, they're ownership in a company. So I start a company, XYZ company, we make widgets. I wanna raise money to buy, to build more widgets. Two ways of doing it, offering debts or offering ownership into the company, both of it. We're selling, we're either selling the debt and I'm giving them an interest rate in order for them to loan me money or you if you're investing or I'm giving them ownership into the company and the investor in a sense gets more money by the appreciation of the company. So that's as simple as it is. I don't care if it's Apple or if it's a company you start by yourself. If it's a company that you start by yourself you can either privately get investors that invest in it and sell ownership or stock into your company or publicly which means you enlisted on an exchange and they'll let anybody that wants to buy into your company. So that's all stock is. Now, because of the nature of political environments and business cycles and so forth again we talked a little bit about diversification and why diversification is important because certain sectors may go up at different times and I'm gonna show you a chart of historically what that means. So the first diversification I divide I'm going to do with stocks is look at dividend paying stocks are value stocks versus growth stocks. So the growth stocks are the stocks that you buy in and why you buy in is you believe that that company is going to grow and as that company appreciates and grows to bigger valuation and we're gonna talk about what valuation is and the next bullet point here. If you sell it, you're gonna get more money and that is your reward buying a growth stock. A value stock is a company that maybe they're not looking to get bigger but they have annual revenues that continue some of your like Johnson and Johnson's or your AT&T they're a company that's not really looking to get the next greatest technology but they're providing a service that is constant that will probably be always needed into the future. They pay a dividend which means they're in a sense rewarding their shareholders for owning that stock by giving out, think of it as profit sharing. Some of the profits they have back to their shareholders and that's in the form of a dividend. Dividends are taxable. So you wanna be careful both with your growth as well as your dividends because both are taxable if they're in a taxable account. Now I promised to go over what capitalization means or the growth of the company. So you have large capitalization companies, mid capitalization companies, small capitalization companies are shortened to large, mid and small cap companies. Capitalization is if you take the total outstanding shares and multiply it by the stock price that's your capitalization. So if you have a company over 10 billion that's a large capitalization company. If you have a company under two billion that's a small cap company between two and 10 billion are mid caps. Why this is important is the fact that if you have a small cap, a small cap that has under two billion in capitalization or is valued at under $2 billion, then they have revenue but not as much as a $10 billion company. So if they wanna go in a new direction they have to be more careful about their money and their finances. They can be more susceptible to political changes or tariffs that happen. So they can be more susceptible to industry risk or market risk is what we call that versus a large cap company which has more resources. They can lay people off, they can build new plants more easily. They can shift assets more easily and be more adaptable. Now there's times where small cap benefits over large cap. Why? Because a small cap company, think of it like the Titanic versus a speedboat. It's a lot easier to turn a speedboat versus the Titanic. So if you have free cash and you're a small cap company and there is a political change that happens or tariffs that change, I bring up tariffs a lot because it's in the news. You look at the automobile industry, you look at the steel industry, how much they were hurt just in the last five years with the changes in tariffs or chip shortages and that sort of thing, how they affect large cap companies versus small cap companies, you can really see the difference. So do you wanna invest in the Titanic or a huge boat? Probably the Titanic is a bad example because it's sank. Huge freight boat or do you wanna invest in a speedboat? Speedboat, they're more susceptible to the waves versus a huge freight boat but the freight boat takes a little bit more if there's some changes in the environment. If you invest in a large capitalization company, Apple, Facebook, Cisco, I listed three there and we're gonna talk about what ticker symbols are in a second here. It's less likely to sink, right? They can do a lot of things before that company actually goes under versus a speedboat that might, big waves might take them under. So moving on to how you trade these positions. So stocks have symbols that you trade on. The origin of the stock market was people standing around screaming at each other saying, I'll buy Apple for X amount of dollars. Well, Apple wasn't in existence then but I'll buy XYZ stock for X amount of dollars and somebody says, sold and if you've ever played the game pit, kind of similar to the game pit. So screaming out Apple versus AAPL or FB or something of that nature. And now even with computers, if you can think if you had to type Apple corporation or Facebook, now Meta, sorry, I should update that slide or Cisco versus CSCO, it's much quicker for something to try to trade within abbreviation. So your ticker symbols for your stocks, they're usually alpha characters, meaning ABA through Z characters and anywhere from one to four characters there. We're gonna go on to, there's things called QCIPs that things trade on and mutual funds and we'll talk about some differences in the trading symbols for those and how to see whether or not you're trading a stock versus a bond versus a mutual fund in a second here. So employee stock options, a more advanced topic is employee stock options because it deals with stock, I put this slide next. Not everybody's gonna deal with employee stock options in their lifetimes. So what they are is like I mentioned in the beginning a company may want you to come work for them but they don't have the money that may be the going salary they'll offer you stock options in their company. So maybe you're worth $250,000 in the market but they only have $150,000 pay you a salary. However, they're gonna give you stock options and what they're saying is you're a valuable person we want you to come work for you. We think those stock options is going to overcome the lost salary so if you can believe in us, we'll believe in you and in the long term we want you to be part of our success. So a couple of things to play into that whether or not you wanna accept an offer like that do you have time to wait it out? Usually there's a vesting, stay with us five years and then your stock options will be available to you because they're not gonna give you on day one because then you'd get stock options and have to quit and they don't get the value of your services. So a couple of things to remember when we're talking about stock options is what's the vesting period? Are they qualified or non-qualified? Are you paying the tax on them? Are they paying the tax on them? What's the cost basis? Meaning do you have to put money up for them or are they just giving them to you? And can you afford to have that? Do you need $250,000 to live on or do you only need $150,000 and can you take the risk for that employee stock options? So again, kind of a sidetrack to talking about common investment vehicles and how to invest, but I wanted to make that I just wanted to be indulged there because I think it's gonna be pertinent to some of you as you go out into the workforce. It's important if you get stock options maybe reach out to an accountant because there are different tax implications on them depending on your situation. But a big thing is can you afford to take the lesser salary and like anything risk versus reward? A lot of times you believe in the company then it may reward you but there's also a chance of those stock options will go to zero as well. So moving back onto our track here and talking about mutual funds something that trades on exchange that more folks will probably deal with. Stocks, if you have a smaller amount of money and you wanna invest it's thought that you need around 25 to 30 positions to be diversified. And again, I promise I'll go over a slide to find diversification makes sense. But if you don't have that you can invest in something called a mutual fund. Mutual fund is a basket of stocks. So you have your account bucket and in that account bucket whether it be taxable or tax deferred you can also have these baskets called mutual funds and they can be a basket of stocks, bonds or even real estate. There's REITs are in a sense of basket of a lot of individual positions. So you'll have a manager that buys Apple and Facebook and I'm sorry Metta and whatever else and then you buy a slice of the ownership of that fund in a sense. Funds are categorized by styles. You know, the manager for the there's rules on mutual funds so they can't just invest on anything and everything so you don't know what you're investing in if it might be a large cap fund it might be an international fund it might be a technology fund they'll have an idea of what you're investing in but there are fees associated with it. You're gonna have somebody managing that so you have the management fee you have a 12B1 fee which in a sense is like the overhead fee pays for advertising and operations and that sort of thing of that fund and then sometimes you have what's called a sales loan so there's no loaded funds and then there's loaded funds. So the loaded funds is like the commission to whoever sold them for you. So there's funds without commissions and there's funds with commissions. This day and age commissioned funds are or loaded funds are really going by the white side there's enough good no load funds out there that I would say look for your no load funds first and see if you can find a good no load fund. Cost matters, right? If you can buy the same car for $50,000 that you could for $100,000 you wanna only wanna pay $50,000, right? So look at those loans just because somebody offers you a loaded fund there may be a equivalent no load fund and that's something to ask for. If you are looking at loaded funds and are willing to pay somebody to pick out a fund for you then you should know that there's A, B and C shares. So A means you pay that the commission upfront B means you pay the commission when you sell the share and C means you pay it on going. The other thing about mutual funds is they only trade once a day. So unlike stocks when if you see something you don't like you can make a trade and you can sell it right away mutual funds you cannot. They trade once a day because the manager is managing stocks during the day and they only value the position at four o'clock when the market closes. So at four o'clock when the market closes they'll say, okay, this fund is now worth dollars and now you can sell it. So one of the downsides of mutual funds is gonna be the fact that you don't have liquidity. You only can trade it once a day. So if you're looking at mutual funds positive diversification negative additional fees which may or may not be worth paying for and two is the lack of liquidity except for once a day. Once a day is still better than there's certain real estate that may have other restrictions where you can't sell it for weeks or months because of closing restrictions. So when we say that mutual funds aren't as liquid as something like stocks they're still very liquid in comparison to other investments that you could be investing in. If you buy a piece of art you have to give it to an auction and it might be six months before you can sell it. So again, looking at in the scheme of things mutual funds are still very liquid but not quite as liquid as stocks. So when you're talking about you have the personal risk of that you're taking on you have to be are you somebody that wants more control or less control? Something to think about when you're investing. Ticker symbols for mutual funds or ticker symbols are what you use to trade. You can see that most of them end in an X. So if you're looking at an investment and it ends in an X chances are it's a mutual fund. Index funds. Index funds are fun because they give you the diversification of a market or sector in very low expenses and most of them are not loaded. I haven't seen a loaded index fund in a while. Why? Because a computer programmer for the most part runs it. If you are following the S&P 500 and that's an index so I have not thrown out names of indexes yet but we have these indexes which track the overall market which a lot of people use as a benchmark of how well they're doing in investing. So some folks investment strategy is I'm not gonna try to beat the market because if I know the market goes up 75% of the time then if I'm just investing in the market, overall market then that's good enough and that's my investment strategy. So I'm just wanting to buy into the overall market. So buying something that like an index fund is attractive to them. And again, low internal expenses because if you have an index of the S&P 500 which is an indexing the 500 largest companies in the United States or you have the Dow 30 or Dow Jones 30 industrial largest industrial companies or there's the NASDAQ which is technology pick whatever index you want and you just wanna invest in that then a computer program just buys and sells something falls out of the top 500 largest companies it sells it, if something goes into it, it buys it. So not a lot of personal energy spent and therefore the internal costs are less and it's considered more of a passive investment strategy. ETFs, ETFs are a fund project of John Bogle's who was founder of Vanguard, he passed away. I think he did a great things for the market as far as brought diversification down to the everyday investor by creating something called EETFs or exchange traded funds. So they give you the diversification of a mutual fund but the liquidity of a stock. So they trade intraday which means you can trade them whenever you want and they also give you the diversification. There isn't a lot of active ETFs. If they are, they do have higher internal expenses similar to a mutual fund. Most of them are going to be your indexes and so forth. Here's a couple of typical symbols. You can see that they're gonna be more like the stock ticker symbols. I like ETFs because they give you again the diversification of a mutual fund and the liquidity of a stock. So if you're investing in the market it really gives you the best of both worlds. However, ETFs, the downside of ETFs because you can trade a lot of positions very quickly has created higher volatility in the market. So again, everything has a pro and a con, right? So again, pick investments that are right for you. Bonds, we talked about the equity side of things are buying into the ownership of companies. Now we're gonna talk about buying into the debt of corporations. So bonds are considered to be more secure than stocks. And the reason why is if a company goes bankrupt your debt gets paid off before the owners of the company gets paid off. So if you are not wanting to take on a lot of risk you have a shorter timeframe and we'll talk about why timeframe makes sense a little later in this presentation maybe bonds make a lot more sense for you to invest in. What bonds are? Again, if I'm raising money and I need a million dollars and maybe I'll say, okay, I'll give it out an increments of 100,000 and I'll pay you 5% a year for it. So usually what I did there is I gave the increments it pays interest. So I'm telling you how much I'm gonna give you in order for you to loan me money. It's a set maturity. So you know when you're gonna get your money back and you'll get your principal back. If you hold it till maturity as long as the company doesn't go bankrupt you get your principal back. There's no guarantee of getting your principal back with stocks. So hence why bonds are thought of as more secure and that's why they're also less volatile and fixed income, they consider fixed income because they pay a set interest, right? Stocks can change, if they're paying a dividend they can change that dividend. Bonds, once you buy a bond and if they say they're paying you 5% interest they have to pay you that 5% interest in telemetry. So it's considered fixed income because they're giving you a fixed income until it matures. They trade a little different than stocks they trade with a QCIT number which is a nine digit alphanumeric code that they trade on and they trade on the bond market not like the NYSE or the New York Stock Exchange. So when you're choosing a bond selection when you're choosing a stock you probably wanna look at things like earnings are they making money, what the revenue is are they increasing, are they decreasing in revenue those type of things. On bond selection it's all about balance sheet, right? Does your balance sheet balance? Do you have enough money to pay your debts? So they've created this chart that goes from AAA all the way down to D. Anything that's triple B minus or BAA3 and above on this chart if a company's debt is right above that it's considered an investment grade bond which means their balance sheet balances they can pay their debts. Anything below that means that they can act currently there's something in their balance sheet that says it doesn't match and they're in the red. So some people like buying into companies that may be newer maybe they just made a big acquisition and they're in the red currently but they believe that later they're gonna do better and so they'll take that risk. Anything that has a little bit more risk as you can imagine has to pay you more money because you are taking that risk. Things like CDs or US treasuries are usually considered the highest because their CDs are guaranteed you are guaranteed to get your money back something called FDIC guaranteed but as you can imagine because they are guaranteed the interest rate that you'll get for owning them isn't very much. Treasuries being next because it's the data of the US government the US government can always print our money and we have to deal with it with inflation. Again, that's another conversation that we can talk about another time but when we're talking about how you rate things then your treasuries and then your municipal bonds are your bonds of local governments, state governments which the federal government has said if local or state governments get in trouble they'll come in and try to help them out to what level that could be up for discussion but there is some backup for local and state governments. Then you have your corporate bonds. So your corporate bonds and the scheme of things again talking about how comfortable you are with risk. There are a couple of levels that are a little bit more secure than your corporate bonds and obviously hence the chart that we have here there's different levels of corporate bonds as they are. Taxable treatments of bonds there's some beneficial tax bill treatments if you're talking about munis or municipal bonds and treasuries. So munis are exempt from federal tax and treasuries are exempt from tax at the local level but taxable at the federal level. So when you look at treasuries versus munis if you're in a high tax brackets putting some fixed income in your account because you have some preferential tax treatment if you are in a taxable account probably makes sense corporates are always taxable. Real estates some of these collabs as the popular kids say these days real estate is like a collab between investing in real estate and investing in the stock market. It is buying a manager will buy different properties different mortgages of properties different leases of properties create in a sense like a mutual fund and sell you ownership into that in a sense kind of like a mutual fund of different pieces of property. So maybe you don't have enough money to buy a piece of an investment property but you want to invest in real estate something like a re-make might make sense for you. And again, you can see the ticker symbols for that if you're interested in that actual real estate this is a good transaction to buy an actual real estate. A lot of folks even in Ann Arbor because it's a college town has invested in real estate because there's always a demand you have a constant stream of new buyers coming into Ann Arbor. So there's other places in the country like New York or California where it's been very popular for real estate. And there's other, not to say that anything in between has not been popular, just giving some examples. Pros, rental property tends to be a hedge against inflation and it's a physical asset that we talked about before. Cons, the appreciation of property usually trails the market. It's not considered liquid. We talked about that. You can't sell it instantaneously and it requires additional capital. If you buy Apple, Apple doesn't come back to you and say, oh, by the way, we want to do this new project because you're an owner. You owe us an additional $100,000. If you actually own real estate you have things like maintenance or property taxes a roof that might collapse or again those property taxes that I do every year that you constantly have to give money to this asset to continue to own it in order to get the appreciation down the road. Commodities, currencies and Web 3. Why I loop these together is because these are considered high-risk investments and we're gonna talk about what that looks like in some charts coming up here. So commodities and currencies, I kind of broke these out even more so between commodities and currencies and Web 3 and why I did that is that the track record commodities and currencies have been around for a long time. Web 3 is a relatively new investment. So anything that doesn't have a huge track record where we can track it through periods of high inflation, low inflation, different political policies different taxation policies and know how it responds and how people respond to it are considered higher risk. So Web 3 has only been around for a short period of time. We've seen investments come and go and just kind of fizzle out over the scheme of things. So a lot of investors say, okay, that's too much like gambling right now because there isn't a track record of how that's going to respond to different economic situations. There's other individuals say, I don't need this money. It could go, the upside is high and I can afford to lose this money and therefore I'm happy to invest in Web 3. So again, because of the track record just kind of divided those two assets. And again, you'll have to decide for yourself whether Web 3 makes sense or commodities or currency if you're wanting to invest in some of these higher risk investments. You can see some of the reasons why you would. They protect against inflation. They can hedge against geopolitical events. But again, if you're hedging against geopolitical events, they're also susceptible to geopolitical events. So you've got to be careful there. Commodities and currency are highly leveraged which means you can borrow against them. Again, positive and a negative because if they're highly leveraged and which means if you can loan against them but the value goes down, there are instances where people end up owing money. They lose everything in their original investment and then they still owe additional money and they have to come forward with an additional check. So leverage is something that I don't personally do a lot of leverage. I think that you can make a good investment and be successful without using a lot of leverage. I know people that do use leverage. So again, how risky do you want to be and how much risk do you want to take out? Does give you a diversification of something other than companies, buying in companies or stock market, buying into dollar denominations or art or wine or other things that might be considered commodities give you diversification. And then leverage and volatility. We've already kind of talked about that. Pros of web three, you can look at that. A lot of that is highly unregulated right now which means it's kind of a wild west. It gets hacked. There's not a lot of certainty of what's gonna happen there. Decentralized is not controlled by one government or so forth and a lot of people find that very attractive. But you can see where it's been very fragile to real events and I have some charts to show you that early state technology. Again, unregulated is both a pro and a con here. There's energy concerns about that as we fight this global fight against climate change. There's people that are very much a fan of web three but there's some individuals and companies very much against it because of the energy concerns. Like a history we talked about and volatility. So this process, I told you eventually we get to process which I think is very, very important. And again, to bring up greed, hope and fear those emotions that control a lot of the market. So when you develop an investing process, you put together your safety net, you put together your budget, you know how much you've left over to invest, then you sit down and say, I had the X amount of dollars left over. I brought up briefly earlier about whether or not investing in a taxable account or tax deferred account makes sense depends on your goal, right? So first and foremost, foremost, you're gonna set your goals. Short-term goals are the long-term goals. So then you're gonna identify that time horizon. Buying a car is likely a short-term goal. However, maybe your goal is to own a Ferrari and you don't care how many years it takes to get you that Ferrari, it might be a longer-term goal, right? Target rate of return. Well, of course everybody wants a 15% rate of return or something like that, but we're gonna go over a little bit about, you know, historical returns and what that means as far as allocation. And that will also play into number four, which is understanding your risk talents. Diversifying and I'll show why that's important. And then selecting your investments and monitoring and adjusting as needed. A lot of people jump right to six and, you know, fail in their investment. Quite frankly, they fail in their investment process because one through five is very important and really key to your success. So first of all, set a goal. Smart goals. Have anybody heard of smart goals? I'm sure, you know, when I'm in person, we've talked a little bit about that because I think it's important, right? You wanna have a timeframe. You wanna have something that's measurable. So smart, right? You want to, there's an acronym and you can look it up. We can spend probably, you know, good 20 minutes talking about smart goals, but you should have smart goals when you are investing. And you can have multiple goals. Most people have multiple goals. I wanna be a car, I wanna buy a house. I wanna retire. All those things are important. Next, identify a time horizon. So part of your smart goals isn't actually gonna be a time horizon because when you develop a smart goal, part of it is making it measurable, right? The M in smart is measurable. Never invest in the market if you have a timeframe of less than three years. I can't control what the market's gonna do. I can't control what the politicians are gonna do. I can't control monetary policy. These are all things that play into the market, whether the real estate markets or the commodities market or the Web 3 market or the stock market, all those things are controlled by things outside of the investment itself. So if you need something within three years, don't invest it in the market. Chances are money may or may not and it really is gambling at the point. The longer the time horizon, the more risk you can take because the more you can weather the ups and downs and if 75% of the time you're making money, then that makes sense. So again, target rate of return, if you can handle 5% or you need 10%, that's important to look at it and say what kind of rate of return do I need to meet my goals? And then look at it and see if it's possible and if you're comfortable with it with the idea that lower risk generally means lower return, higher risk generally means higher return. And then I kind of put this on here, growth, income, stability, because think of it as a triangle. You have your growth, you have your income and you're actually stability. If you're too much on growth, you're gonna give up income and stability. If you're too much on stability, you're gonna give up growth and income. So you need a balancing act of your growth, your income and stability for all your goals. And it's not a, you can't have all three. You can't have all three. You're gonna have, if you overweight in one, then it's gonna come at the expense of another. So again, understanding your risk tolerance and we're gonna go over what that means. So understanding your risk, when we say lower risk, lower return, means can you sleep at night? If your investments, if you lose 40%, if you have $100,000 and you wake up and it's only worth $60,000, are you freaking out or are you losing your mind? Well, if you are, then you took on too much risk because you can't sleep, it gives you anxiety to lose that amount of money. If you can only lose 20% or $20,000 or $100,000 before you start feeling nervous, then that's your risk tolerance. If you can only lose 5%, $5,000 before you start feeling nervous, that's your risk tolerance and then develop your upside from there. So diversify, nothing's a sure thing in the market and I don't care who tells you crypto, it's a sure thing, Vest and Ethereum, it's a sure thing. Vest and Dogecoin, I don't think anybody hopefully has ever said Dogecoin is a sure thing. But just in case there's somebody out there that has, if you've ever looked up how Dogecoin started, then please do and you'll understand what I'm saying about that. Or Vest and this Picasso, it's a sure thing, right? It all depends on what you buy it at. Overpay for Picasso, maybe you won't get your money back for 20 years or something of that nature. And if you need the money in 10, it's not necessarily a good thing. Ways to diversify, asset classes, industries, investments. And one to put negative correlation, I don't know that anything's negatively correlated these days. We used to talk about a negative correlation meaning if something goes up, something else goes down. So if the real estate market is up, stock market's down type of thing. There isn't necessarily, we see a lot of correlation between currencies out there, real estate market, stock market out there. Web three is kind of doing their own thing, though we do see some correlation towards political events and instability and the performance of web three. So we're starting to develop some correlations there that we're looking at as those investments start to mature. But if anybody says negatively correlated, there really is no such thing. But having a different correlation, even if it's slightly different, probably makes a little sense, a little bit of sense for that diversification. So portfolio allocations. Okay, so this is important. This link is important. You're gonna have these slides. And so clicking on this link is gonna be important. I like Vanguard and they also laid this out on their public website, easy to grab. So I'm going to click on this website right here and it is going to come up and just give me a second. I need to change my view here. No, make it a little bigger. Oops, just a second. It's not gonna wanna do that. So I'm going to just scroll down here. I can't, I guess it's gonna make it really small if I make my window bigger here. So what I'm gonna do is scroll down here. Vanguard portfolio allocations do a fabulous job at saying, okay, historical risk versus return of different portfolio allocations. We talked about diversification and we talked about not feeling comfortable if you lose X amount of dollars. They laid out very, very clear here in my mind. You have 100% bonds, average rate of return is 6%. So when you go back to deciding how much you need to earn, if it's only 6%, well, worst year is about 8% downturn. That's not, of that $100,000 you invest, losing only $8,000, that's not a lot. In comparison to having 100% equity portfolio, if you have $100,000, the worst year is losing 43% or only having around $57,000 left, that you might feel a little bit different. So when you decide how much money you need to earn every year and then go to a chart like this and say, am I comfortable with taking on that amount of risk? So again, you wanna look at the worst year but also the average years with a loss tier and really the downside should drive your decisions. If at any point you start to feel nervous, build up from there. Too many people look at the possibilities and forget about what could happen in the down years and how you may feel about those down situations. So let's go, let's move on. Again, that's a fabulous chart there and again, something that you'll have access to. Just a second, I need to get back to, there we go. We are recognizing my screen. All right, talking about why diversification is important, another chart to show this. This is a small chart depending on your screenshot size. It may look like a bunch of colors and you can't read anything or it may, you may be able to see things but again, you're gonna have these slides. What it shows is the different sectors and when they've been the top performing sector or the worst performing sector. So like for an example, 2021 large caps did the best. The year before, sorry, small cap equity. I thought I read it incorrectly, I thought I remembered small cap but I thought I read it incorrectly there. So unless you can say, I know small cap's gonna do well this year or I know real estate's gonna do well this year, it's really hard to predict. So having a range of investments, you can see what's gonna make a little bit more sense and the next slide is gonna kind of hit that home a little bit more. If you are diversified and you look between these periods of times, why I picked out these periods of times because we've had some significant events happening 2008 or 2009 to 2017, you can see the stock market return. Having a diversified portfolio, you can see this investor never had the highest loss. Sometimes they had, they lost a little bit more than the market but ultimately they ended up in pretty much the same spot, right? 29,000, you know, around $29,000. So having a diversified portfolio kind of takes away the peaks and valleys and gives you a little bit more smoother ride. And for most people, that means that they're sleeping better at night. So we've talked about real estate, we've talked about the stock market, cryptocurrencies, NFTs in the metaverse, those web three investments, a promise that we'd talk about those. So here's a chart of cryptocurrency, it's a six years performance. You can see that there's spent some ups and downs so a lot of the response to political events that we've seen has been within the last couple of years. So not a lot of historical knowledge on these investments. Now, of course, if you bought it at the beginning of 2021, you would love web three investments because you've made a ton of money if you were able to sell up here at this peak. If you're writing it all the way back down, depending on how far down it goes, you may say, well, that was an interesting ride. But there's not a lot of predictability right now in those web three investments. So it makes it a little bit unknown, a little bit more like gambling or a lot more like gambling than some of the other investments. But again, I'm not saying don't do that, I'm just seem being aware that they're higher risk. So again, that's of cryptocurrencies. If we looked at NFTs, a lot more variability. And when you look at the correlation of political events, they even have a shorter, where you're looking at cryptocurrency, they started around 2010, NFTs started in the last several years. So even less of a track record to see how they're going to respond. Once you've picked out your investing, it's important that you monitor and adjust as needed. Nothing said it and forget it. The government is always making new policies. Monetary policy is changing. Companies are changing. Companies are having new revenue stream. So it's important that you monitor and adjust as needed. You know, when you're picking your stocks and you know, if you go back to stocks a little bit more, you know, there's a lot of programs out there right now, whether it's Fidel, whether it's Fidel, yes, Yahoo Finance, Google Finance, they'll give you the revenues. They'll compare them against your peers. So for mutual funds, there's Morningstar. There's a lot of information on the web these days that'll help you analyze stocks, analyze mutual funds, tell you who's doing more, they compare it against the peers. The important thing that is you're developing a process and you're following that process. So a question that I always get is, you know, when do you hire an advisor? The information's out there, right? I've talked about the information's out there. Do you have the time? Do you have the desire or do you have the knowledge? If you don't have any of those, then hire an advisor. If you don't have one of those, then hire an advisor. If you have all of those, then the information's out there. The big thing is just be consistent in your process and developing a process. That's what's gonna make you more successful. So I've done my best to talk. I only see one thing in the chat here. So I'm gonna grab that real quick and I've left about, I guess, I was gonna say 15 minutes, but just shy of that for questions. So I wanna open this up to that. So let me take this question first. At Michigan, we have 403b Roth, some supplemental retirement account. Is there any benefit to doing a Roth IRA over this? No, I would do the 403b, because it's an employer-sponsored plan, you're gonna be able to put away more money. So you're gonna wanna use that 403b Roth supplemental. I mean, hypothetically, a Roth IRA, you can do individual stocks where you're 403b at the University of Michigan, you only can do the mutual funds that they've selected for you. So yes, technically the answer is, that's the benefit of doing a Roth IRA. However, because you're allowed to put away more money into your 403b through the University of Michigan and the selection that the University of Michigan has given you, it's a pretty decent selection of mutual funds, lower costs, that sort of thing. It's a deficit plan. Personally, I would say, and it's my opinion, the 403b Roth supplemental retirement account through the University of Michigan is a decent plan. It's something to definitely consider. So, Maureen, are you in charge or how do you wanna do questions? Do you want people to continue to put things in or? I will turn off the recording. And if people do have questions, you can raise your hand or put it in the chat or just begin speaking. So I'm gonna pause this right now.