MAKE A MILLION

1
MAKE A MILLION!!!

• Or a Billion???

2
WHY MONEY?

• PURSUE YOUR PASSION

3
SELECTED STATISTICS

• Net Worth
• Median Family Net Worth Total US 60,000
• Median Family Net Worth - College Grad 105,000
• Income
• Median Family Income - Total US 45,000
• Median Family Income - Masters Degree 85,000
• Median Family Income - Ph.D. 105,000
• of Family Income that exceeds 75,000 20
• of Family Income that exceeds 100,000 7

4
Percent of Households Net Worth exceeds
1,000,000

• 4.76

5
Percent of Households Net Worth exceeds
5,000,000

• .415

6
Percent of Households Net Worth exceeds
15,000,000

• .2

7
Percentile Net Worth in US

• 
  Average Net Worth
• 99-100 Percentile 10,204,000
• 95-99th Percentile 1,441,000
• 90-95th Percentile 623,500
• 80-90th Percentile 344,900
• 60-80th Percentile 161,300
• 40-60th Percentile 61,000
• lt 40th Percentile 1,100

8
YOU NEED A PLAN

• Write a plan!!
• Probability Parallel Universe
• As a backup!
• Allow you to pursue personal goals and career
  with security.
• Can make important decisions under less pressure.

9
ASSUMPTIONS

• STABLE WORLD
• ECONOMY GROWS
• STOCK MARKET
• TAXES
• LIFE EXPECTANCY

10
YOUR LIFE EXPECTANCY

• Acceleration None 20 40
• 1900 49.91
• 2000 77.25
• 2100 119.57 128.03 136.5

11
COMPOUND RATES OF RETURN
12
Compound Rate of ReturnStandard Poors
5001946-2004

• 11.76

13
IMPACT OF COMPOUNDING

• One 2000 investment earning 11.76 for 70 yrs
• No Compounding Result
  16,464
• Compound Rate of Return Result 4,798,190
• 99.7 of your Return is the Result of Compounding
  Previous Returns

14
Compound Rates of ReturnNet Result One 10,000
Investment

• Compound Return 11.76 per Annum
• Net Result
• 50 Years 2,596,089
• 60 Years 7,891,937
• 70 Years 23,990,954

15
THE PLAN

• Invest 2,000 a year
• Avoid or Defer All Taxes
• Reinvest all Dividends Distributions

16
TAX IMPLICATIONS

• YOU WILL LOSE 80 OF YOUR NET WORTH OVER YOUR
  LIFETIME TO TAXES

17
IMPACT OF TAXATION

• Avoid all Taxes
• 2,000 per year
• _at_ 10 equals 17 million in 70 years
• _at_11.76 equals 46 million in 70 years

• Pay Taxes at 30
• 2,000 per year
• _at_ 10 equals 3.4 million in 70 years
• _at_12.2 equals 6.5
• million in 70 years

18
Tax Avoidance or Deferral Methods

• IRA Individual Retirement Account
• Regular IRA
• Roth IRA
• Annuity
• 401 Ks
• Keogh and SEPs (Not Yet)

19
INVESTMENT VEHICLES

• INDIVIDUAL STOCKS
• STOCK INDEX FUNDS
• Vanguard
• Fidelity

20
Compound Rates of Return - Stocks

• Years Rate of Return
• 1802-1997 8.4
• 1926-1997 10.6
• 1946-1997 12.2
• 1982-1997 16.7
• 1997-2003 9.5

21
NET WORTH POTENTIALCONTRIBUTION -2,000 PER YEAR

• (Assumes same return, 12.2 as past 50 years)
• YEARS RESULT
• 50 5,793,342
• 60 18,317,144
• 70 57,914,370
• 80 183,111,199
• 90 578,953,222

22
NET WORTH POTENTIALCONTRIBUTION -5,000 PER YEAR

• (Assumes same return, 12.2 as past 50 years)
• YEARS RESULT
• 50 14,483,356
• 60 45,792,861
• 70 144,785,925
• 80 457,383,056
• 90 1,447,383,056

23
The Early Years Count the Most!

• 2000 per year for 50 years _at_10 2,555,979
• Year 1 10 produces 1,586,895 or 61.1 of total
• Year 11-20 produces 611,817 or 23.9 of
  total
• Year 21-30 produces 235,882 or 9.2 of
  total
• Year 31-40 produces 90,942 or 3.5 of
  total
• Year 41-50 produces 58,875 or 2.3 of
  total

24
Give up one Slurpee per day for 60 years -
1.09You will be worth

• 4,612,375

25
Give up one Tall Caffe Latte per day for 60 years
- 2.50You will be worth

• 10,878,243

26
Give up one Big Mac Meal per day for 60 years -
4.50You will be worth

• 19,580,837

27
Save 23 per day for 60 yearsYou will be worth

• 100,139,441

28
Save 316 per day for 60 yearsYou will be worth

• 1,000,000,000

29
START NOW!!! DONT WAIT!!!

• USE DISCIPLINE
• TIME VALUE OF INVESTMENTS
• USE AS A BACK-UP PLAN

30
Alternative Investment Plan1

• Invest 1000 In One Stock
• Each Year

31
1950 If I had invested 1000, only once, in
Coca Cola

• Today, I would have

32
1,040,005
33
1950 If I had invested 1000, only once, in
Exxon

• Today, I would have

34
1,719,925
35
1950 If I had invested 1000, only once, in
Kraft Food

• Today, I would have

36
2,214,320
37
1950 If I had invested 1000, only once, in R J
Reynolds

• Today, I would have

38
4,527,026
39
1,000 Invested Only Once in 1950In All Four Is
Worth Today

• R J Reynolds 4,527,026
• Kraft Foods 2,214,320
• Exxon Mobil 1,719,925
• Coca Cola 1,040,005
• 1000 in all four (4000) 9,502,276
• Assumes
• All Dividends Reinvested
• Investment Made through Tax Advantage Acct

40
Invest 1,000 twice, in 10 different stocks for 5
years

• Gives you 10 chances to be a millionaire in 50
  years

41
What Stocks to Invest In?

• Large Cap Stocks - 10B in Market Cap
• Dividend Paying Stocks At least 2
• Global Stocks Significant of sales outside US
• Companys that will Last
• Companys that have Lasted
• Stay AWAY from Hot Technology Stocks
• Stay AWAY from New companies
• Invest in companys in different industries

42
How to Pick a Stock for the Long-Run

• Company in Existence for at least 50 yrs
• Compound Return to Shareholders exceeds 11 for
  past 10 and 50 years
• Earnings and Dividends growth are stable
• Company globalizing business
• Stay away from technology and new companies
• Invest in companies that benefit from Tech

43
Stocks to Invest in for Long Run

• Altria MO 4.2
• Citigroup C 3.6
• McGraw Hill MHP 1.3
• Hershey's HSY 1.7
• Procter Gamble PG 1.9
• Pfizer PFE 3.2
• General Mills GIS 2.8
• Anheuser Busch BUD 2.5
• Johnson Johnson JNJ 2.2
• General Electric GE 2.9
• United Technologies UTX 1.5

44
Alternative Investment Plan2

• Invest 2000 a year in Stock Index Mutual Fund
• Each Year for 5 years

45
Stock Index Mutual Funds to Invest

• What are they?
• Why invest in them?
• Fees matter
• VANGUARD MUTUAL FUNDS
• 500 Index Fund
• Total Stock Market Index Fund
• 1-877-662-7447
• Vanguard.com

46
How to Get Rich Slowly

• William Thomas Morris

47
Stocks for the Long RunThe Future for Investors

• Jeremy J. Siegel

48
What Works on Wall Street

• James P. OShaughnessy

49
Additional stocks that come close to meeting
these requirements

• Exxon Mobil
• Bank of America
• ConocoPhillips
• Dupont
• Merck - ???
• J. P. Morgan

• Wells Fargo
• Wachovia
• 3M Company
• Dow Chemical
• US Bankcorp
• Chubb

50
Dr. Gs Stock Investments 195710,000

• Stock Value if held to 12/03
• Celanese 2,691,913
• Smith, Kline French 447,500
• AT T 2,032,084
• General Motors 87,095
• Sperry Rand 22,265
• Keebler 122,896
• Total 5,403,753 Compound Rate of Return
  14.76