Ultimate money skills

1. Ultimate money skills How to keep the money you earn and grow it Have pen & paper ready—Good note-takers will be rewarded at the end of the workshop

2. Bernie madoff Victim list

3. Before you sign your name: • Always read the entire contract. • Ask questions about anything you do not understand. • Anything agreed to verbally should be put in writing. • Bring a trusted friend or legal expert for important contracts. • Do not be intimidated or pressured.

4. Bank accounts • Why do people choose check cashing? • Banks far away • No bank accounts • Don’t like banks • Why not check cashing? • NYS maximum: 1.91% of face amount • U.S. Bank: $10 • Walmart: $3 for checks of $1,000 or less, $6 for check amounts of $1,001-$5,000 $149 / 26 paychecks $1506 on median U.S. income of $50,221 Cashing your Check Doesn’t help you save

5. Bank accounts • Checking accounts • “The eagle has landed.” • Direct deposit • Federally insured up to $250,000 • Write checks, pay bills • Major purchases – If you don’t have thecash, you can’t afford it. • Savings/money market accounts • Higher interests • 6 transactions per month • Overdraft protection

6. Bank fees • Demand no-fee accounts • Ally Bank • ING Direct • Ally Bank • No minimum balances • Set up multiple accounts for different purposes • Free checks for life • Among highest interest rates in the nation • Link to your local bank account • Deposit paychecks, cash into local bank (TD Bank) • Maintain minimum balance • Regularly withdraw into online bank

7. Payday loans • These come in different forms • “Traditional” payday loans • Tax refund anticipation loans • Advance fee loans • Student loans/government grants loans • Rent-A-Center TurboTax, Taxcut, etc.Online or on PC

8. Debit cards Why people use debit cards • Linked to checking accounts • Limited spending • Not having to carry around cash Why you should not use them • Fees are common—increasingly so • Overdraft protection—No thank you • Liable for unauthorized uses • Does not build credit history • Banks have less interest in getting money back

9. Credit cards • Builds credit history • Cash back • Purchase protection • Rental car insurance • Don’t get one unless • No annual fees • You must pay off ENTIRE bill every month, before due date • Balances hurt credit, not build it • Never withdraw cash • No balance transfers, checks, teaser rates, etc. SECURED CREDIT CARDS

11. Stock market • http://investorplace.com/2012/03/actively-managed-mutual-funds-underperform/ • “About 84% of U.S. stock funds that are actively managed, rather than passively tracking an index, underperformed versus the Standard & Poor’s indexes that best represent their benchmarks. • That’s right – 17 out of 20 money managers would have performed better if they just read their investments of an index instead of “researching” their own picks. • S&P found that performance was better over the past several years than in 2011... Over five years, 61% didn’t beat the market. • Going back 10 years, the average percentage of funds underperforming has been about 57%.”

12. Another anecdote… • A single mysterious computer program that placed orders - and then subsequently canceled them - made up 4 percent of all quote traffic in the U.S. stock market last week... The motive of the algorithm is still unclear. • The program placed orders in 25-millisecond bursts involving 500 stocks. The algorithm never executed a single trade, and it abruptly ended at about 10:30 am Friday. • Hunsader'ssonar picked up that this was a single high-frequency trader after seeing the program's pattern (200 fake quotes, then 400, then 1,000) repeated over and over. Also, it was being routed from the same place, the Nasdaq (COMP). • "My guess is that the algo was testing the market, as high-frequency frequently does," … • Translation: the ultimate goal of many of these programs is to gum up the system so it slows down the quote feed to others and allows the computer traders (with their co-located servers at the exchanges) to gain a money-making arbitrage opportunity. • The scariest part of this single program was that its millions of quotes accounted for 10 percent of the bandwidth that is allowed for trading on any given day.

13. How to invest in stocks • The more you know, the more you think you know, and the more money you can lose. • Treat stocks as nest eggs • S&P 500 Index funds (TIAA-CREF, Vanguard)The lower the fees, the better • No-load better than anything else • Invest same amount every quarter(dollar-cost averaging) • Do not sell when markets crash • Do not buy when they boom Never “invest” money you will need • Sell because you want to, not because you have to

14. Don’t forget bond funds • When interest rates rise, they can crash • Two types to consider: • Inflation-linked bond funds • Short-term government bond funds • Never buy junk bonds