Chapter 13' MAKING YOUR MONEY GROW AN OVERVIEW

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Chapter 13. MAKING YOUR MONEY GROW - AN OVERVIEW
The ABCs of Putting Your Money to Work
Evaluating Risks, Tax Consequences Investigate
Before You Invest
A. Today Dollars and Tomorrow Dollars 1.
Automatic Accumulation 2. Active
Accumulation a. By Lending b. By Buying B.
Investment Criteria 1. Safety - The Reward/Risk
Rule 2. Liquidity 3. Yield and Total
Return 4. Pledge Value 5. Hedge Value and
the Time Value of Money
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B. Investment Criteria, continued 6. Tax
Implications a. Taxable investments b.
Tax-deferred and tax-sheltered
investments c. Tax-exempt investments C.
Investigation 1. Books 2. Magazines 3.
Newspapers 4. Seminars and Courses 5.
Television 6. Information Overload
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D. Sources of Investable Funds (See
Personal Action Worksheet, text page 348) 1.
Discretionary Income 2. Inheritances and
Gifts E. Who Can Help You? 1. Financial
Planners 2. Yourself
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TALKING POINTSChapter Thirteen, Number One

• Evaluate your tolerance for risk and your
  possible need for liquidity in the following
  investment situations

• 1. Can be expected to range in value in the
  short term by 30, up or down. Pays no
  income. Immediate liquidity at current market
  value should you need the cash in a hurry. (This
  might be shares of stock.)
• 2. Can be expected to range in value in the
  medium term by 10, up or down. Pays 6 yield
  on your investment. Immediate liquidity at
  current market value, but will pay 100 cents
  on the dollar 10 years from now. (This might be
  a bond.)
• 3. Will not fluctuate in value. Pays 4 yield.
  Immediate liquidity of your principal
  investment, but you might lose some accumulated
  interest depending on when you cash in.
  (This might be a savings account.)
• 4. Can be expected to range in value by 10 on
  the downside, 30 on the upside over a
  longish pull. Pays 10 on your investment.
  Heavy management required. Could sell quickly,
  could take many months to sell. (This might be
  real estate.)

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TALKING POINTSChapter Thirteen, Number Two

• Youre interviewing prospective financial
  planners to handle your money matters. How would
  you evaluate the prospects based on the
  information youve gathered?

• Planner A - no credentials, has been calling
  himself planner for less than 6 mos.,
  background jr. exec. in a large industrial
  company, MBA from a state univ., seems
  very bright, very thorough in seeking info.about
  you, works on a fee- only basis, makes no
  commission on securities/services you acquire.
• Planner B - excellent credentials, is a Certified
  Life Underwriter (see text page 491) and an ICFP
  (see text page 274), has good references from
  other clients which were written during a
  time when the stock market was on a long rise,
  works on commission, seems aggressive
  regarding the stock market.
• Planner C - was stock broker for 10 years,
  dropped out because of volatility and
  stress of market, excellent references, but very
  low-keyed and conservative, works on a low
  a fee-plus-commission basis.
• Planner D - old pal of yours whos done very
  well in stock market, youve always admired his
  track record but never wanted to impose on him,
  offers to give you a helping hand in picking
  stocks, will not charge you anything.