The Startup Guide - Section 6: Money

Startup
Guide
2013 Edition
The
SHARE FREELY
Building a Better World Through Entrepreneurship
RYAN ALLIS With Ellen Daly

CEO of Connect.com
More slides at www.startupguide.com
Money
STARTUPGUIDE.COM 208
SECTION 6
MONEY
ABOUT THIS PRESENTATION
THIS presentation IS PART OF A LARGER slide DECK on building a better world through entrepreneurship
For more slides & CONTENT visit:
Startupguide.com
money Key lessons
MONEY IS A REALLY IMPORTANT TOPIC
TO UNDERSTAND
money Key lessons
MONEY IS SIMPLY A STORE OF VALUE WHICH ENABLES TWO PARTIES TO EXCHANGE EVEN IF they cannot barter
money Key lessons
HERE ARE THREE KEY LESSONS
ABOUT MONEY
money Key lessons
SPEND LESS MONEY THAN YOUR EARN
EVERY MONTH
money Key lessons
NEVER GO INTO DEBT FOR SOMETHING THAT
YOU DO NOT NEED

money Key lessons
SAVE UP EARLY IN LIFE AS the law of compound INTEREST HELPS A LOT
OVER TIME
money Five Keys to wealth
HERE ARE FIVE KEYS TO BUILDING
WEALTH
money The secrets to wealth
PAY OFF DEBT
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BUILD UP SAVINGS
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3 3
INVEST IN CASH PRODUCING ASSETS

Savings Accounts Certificates of Deposit Treasury Bonds Municipal Bonds Corporate Bonds LendingClub Notes PRIVATE COMPANY STOCK PUBLIC COMPANY STOCK VENTURE FUNDS HEDGE FUNDS
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THEN USE THE CASH FLOW FROM YOUR INVESTMENTS TO MAKE MORE INVESTMENTS
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earn equity in companies you work for or start

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CONTINUE THIS CYCLE For 40 years

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money The secret to wealth in REVIEW
1. 2. 3. 4.
PAY OFF DEBT BUILD UP SAVINGS INVEST IN CASH PRODUCING ASSETS THEN USE THE CASH FLOW TO INVEST IN MORE CASH PRODUCING ASSETS 5. EARN EQUITY IN COMPANIES YOU WORK FOR OR START 6. THEN CONTINUE THIS CYCLE OVER AND OVER
money The middle class vs. the rich

Individuals in the middle class accumulate more debt as they become more successful. A pay raise qualifies them to borrow more money from the bank so they can buy personal items like bigger cars, vacation homes, boats, and motor homes. Their wage income comes in and is spent on current expenses and ONLY then on paying off their personal debt. SO As their income increases, so does their personal debt. This is what we call the rat race.
- Robert kiyosaki
money The middle class vs. the rich
The rich have their assets work for them. They have gained control over their expenses (by saving and investing money each month) and focus on acquiring or building assets. Their businesses pay more of their expenses, and they have few, if any, personal liabilities.
- Robert kiyosaki
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money Key lessons
IF YOU SAVE UP & INVEST HERE IS WHAT YOU CAN
EXPECT TO HAVE
money What you can expect to retire with
WHAT YouLL HAVE IF YOU SAVE & INVEST

Monthly SAVINGS $1,000 $2,000 $3,000 $4,000 20 Yrs $0.52M $1.05M $1.57M $2.09M 25 Yrs $0.81M $1.63M $2.44M $3.26M 30 Yrs $1.22M $2.45M $3.68M $4.91M 35 Yrs $1.81M $3.63M $5.44M $7.25M 40 Yrs $2.64M $5.29M $7.94M $10.58M 45 Yrs $3.82M $7.65M $11.47M $15.29M 50 Yrs $5.50M $10.99M $16.49M $21.97M
ASSUMES 7% AFTER INFLATION ANNUAL RETURN FROM INVESTING | ADD ADDITIONAL TIME TO PAY OFF ANY CURRENT DEBT
money Two types of investments
THERE ARE TWO TYPES OF INVESMENTS
DEBT & EQUITY

DEBT INVESTMENTS ARE LOANs IN WHICH YOU EARN A FIXED INTEREST RATE RETURN
EQUITY INVOLVES INVESTMENTS in EXCHANGE FOR PARTIAL OWNERSHIP IN A COMPANY

WITH EQUITY YOU MAKE MONEY WHEN THE VALUE OF THE COMPANY GOES UP
money types of investments
DEBT
Savings Accounts Treasury Bonds Municipal Bonds Corporate Bonds P2p LENDING
EQUITY
Mutual Funds Index Funds/ETFS Small Cap Stocks MID CAP STOCKS LARGE CAP STOCKS VALUE STOCKS GROWTH STOCKS Emerging Market Stocks options VENTURE FUNDS HEDGE FUNDS PRIVATE COMPANIES
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money Average returns
HERE IS A SIMPLIFIED EXAMPLE OF HOW YOU CAN HAVE
$1M in 30 years
money To have $1m in 30 years
To have $1m in 30 years SAVE $1k every month
AND INVEST IT
money To have $1m in 30 years
To have $1m in 20 years SAVE $2k every month
AND INVEST IT
money
Two ways TO BECOME FINANCIALLY WEALTHY
THERE ARE TWO MAIN WAYS TO BECOME A MILLIONAIRE
1) Build a business 2) Save & Invest wisely for 30 years
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money
Two ways TO BECOME FINANCIALLY WEALTHY
If entrepreneurship isnt for you Heres how to become a millionaire Automatically
1. Save $1000 per month 2. Invest it at a 7% after inflation return 3. Dont take any out for 30 years
money
ANNUAL RETURNS OF INVESTED CAPITAL
BUT HOW CAN YOU MAXIMIZE YOUR CHANCES OF EARNING a 7% AFTER INFLATION RETURN?
money Average returns
HERE IS A TABLE OF AVERAGE YEARLY RETURNS BY
TYPE OF INVESTMENT
money HISTORICAL RETURNS
OF COURSE PAST RETURNS Arent ensured in the future

But they are STILL HELPFUL
money Table of average returns after inflation

Investment Type Savings Accounts Certificates of Deposit Treasury Bonds Municipal Bonds Corporate Bonds LendingClub A-C Notes S&P 500 Index Fund Dow Jones Index Fund LendingClub D-F Notes
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Approx.. Avg. Annual Return 0.10% 1.70% 2.50% 4.50% 6% 8% 10.60% 11.10% 12.10%
After Inflation (-2.8%) -2.70% -1% -0.30% 1.70% 3.20% 5.20% 7.80% 8.30% 8.90%
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money How to invest
ONE INTERESTING NEW INVESTMENT OPTION IS PURCHASING
LENDINGCLUB NOTES
money Price to earnings ratio
ONE KEY METRIC TO LOOK AT WHEN INVESTING IN A PUBLIC COMPANY IS THE
PRICE TO EARNINGS RATIO

money PE RATIOS
I AVOID INVESTING IN BUSINESSES WITH PE RATIOS ABOVE 30 AND LOOK INTENTLY AT INVESTING IN BUSINESSES WITH PE RATIOS
BELOW 15
money CASHFLOWS
THE BEST WAY TO DETERMINE THE TRUE VALUE OF A PUBLIC COMPANY IS TO CREATE A DISCOUNTED CASH FLOW (DCF) FORECAST
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money Buffets margin of safety
BUFFETs investing method INVOLVES UNDERSTANDING A FIRM WELL CALCULATING WHAT HE BELIEVEs THE fiRM IS ACTUALLY WORTH THEN PURCHASING SHARES WHEN Enough of a margin of safety exists
money CASHFLOWS
WARREN BUFFET IN ESSENCE CREATES DCF MODELS ON EACH COMPANY HE INVESTS IN AND ENSURES THERES A BIG MARGIN OF SAFETy BETWEEN WHAT HE THINKS THE FIRM IS WORTH AND WHAT THE MARKET THINKS THE FIRM IS WORTH
money Portfolio theory
PORTFOLIO THEORY STATES THAT FOR THE AVERAGE INVESTOR RETURNS ARE MAXIMIZED BY DIVERSIFYING YOUR INVESTMENTS AND INCLUDING LOW CORRELATING ASSET CLASSES
money Portfolio theory
BUT IN PRACTICE THE HIGHEST RETURNS ARE SEEN WHEN YOU INVEST IN JUST A FEW ASSETS YOU UNDERSTAND VERY WELL
money Summary of money section
YOU CAN BECOME WEALTHY OVER TIME BY

PAYING OFF DEBT SAVING INVESTing USING PROCEEDS FROM INVESTING TO INVEST MORE AND NOT GOING into debt FOR UNNEEDED THINGS
money Summary of money section
THERE ARE TWO SEGMENTS OF PEOPLE IN THE WORLD

1
PEOPLE WHO PAY INTEREST ON LOANS AND WORK AT COMPANIES PEOPLE WHO RECEIVE INTEREST ON LOANS and own PARTS Of companies
WHICH SEGMENT ARE YOU IN?

Startup Guide
2013 Edition
The
SHARE FREELY
Building a Better World Through Entrepreneurship
RYAN ALLIS With Ellen Daly

CEO of Connect.com
More slides at www.startupguide.com

The Startup Guide - Section 6: Money

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Startup

Building a Better World Through Entrepreneurship

RYAN ALLIS With Ellen Daly

ABOUT THIS PRESENTATION

For more slides & CONTENT visit:

money Key lessons

MONEY IS A REALLY IMPORTANT TOPIC

money Key lessons

money Key lessons

HERE ARE THREE KEY LESSONS

money Key lessons

SPEND LESS MONEY THAN YOUR EARN

money Key lessons

NEVER GO INTO DEBT FOR SOMETHING THAT

YOU DO NOT NEED

money Key lessons

SAVE UP EARLY IN LIFE AS the law of compound INTEREST HELPS A LOT

money Five Keys to wealth

HERE ARE FIVE KEYS TO BUILDING

money The secrets to wealth

PAY OFF DEBT

money The secrets to wealth

money The secrets to wealth

INVEST IN CASH PRODUCING ASSETS

money The secrets to wealth

money The secrets to wealth

earn equity in companies you work for or start

money The secrets to wealth

CONTINUE THIS CYCLE For 40 years

money The secret to wealth in REVIEW

money The middle class vs. the rich

money The middle class vs. the rich

money Key lessons

IF YOU SAVE UP & INVEST HERE IS WHAT YOU CAN

money What you can expect to retire with

WHAT YouLL HAVE IF YOU SAVE & INVEST

money Two types of investments

THERE ARE TWO TYPES OF INVESMENTS

DEBT & EQUITY

money Two types of investments

money Two types of investments

EQUITY INVOLVES INVESTMENTS in EXCHANGE FOR PARTIAL OWNERSHIP IN A COMPANY

money Two types of investments

money types of investments

money Average returns

HERE IS A SIMPLIFIED EXAMPLE OF HOW YOU CAN HAVE

money To have $1m in 30 years

To have $1m in 30 years SAVE $1k every month

money To have $1m in 30 years

To have $1m in 20 years SAVE $2k every month

Two ways TO BECOME FINANCIALLY WEALTHY

THERE ARE TWO MAIN WAYS TO BECOME A MILLIONAIRE

1) Build a business 2) Save & Invest wisely for 30 years

Two ways TO BECOME FINANCIALLY WEALTHY

If entrepreneurship isnt for you Heres how to become a millionaire Automatically

ANNUAL RETURNS OF INVESTED CAPITAL

money Average returns

HERE IS A TABLE OF AVERAGE YEARLY RETURNS BY

money HISTORICAL RETURNS

OF COURSE PAST RETURNS Arent ensured in the future