The Planning Center andIEEE

Preparing for Retirement in

Days of Uncertainty

Purpose of Today

To Introduce

To Inform

To Educate

Introduce

Introduce Personnel

The Planning Center

Introducing The Planning Center

Financial Planning Firm

Registered Investment Advisor

NASD licensed with a Broker / Dealer

Purveyor of Order and Value

What is Financial Planning?

Process for meeting life’s goalsConsists of six steps

1. Establishing and defining relationship

2. Gathering client data, including goals3. Analyzing and evaluating financial status4. Developing recommendations5. Implementing the desired recommendations6. Monitoring

What is a Financial Planner?

A Big Question!!!

Why Certified Financial Planner?

Education

Examination

Experience

Code of Ethics

Practice Standards

Re-Certified every two years

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How do markets work?

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4 years of the DJIA 4/22/1999 – 4/22/2003

Educate 3M Co. MMM

Alcoa Inc. AA

Altria Group Inc. MO

American Express Co. AXP

AT&T Corp. T

Boeing Co. BA

Caterpillar Inc. CAT

Citigroup Inc. C

Coca-Cola Co. KO

E.I. DuPont de Nemours & Co. DD

Eastman Kodak Co. EK

Exxon Mobil Corp. XOM

General Electric Co. GE

General Motors Corp. GM

Hewlett-Packard Co. HPQ

Home Depot Inc. HD

Honeywell International Inc. HON

Intel Corp. INTC

IBM Corp. IBM

International Paper Co. IP

J.P. Morgan Chase & Co. JPM

Johnson & Johnson JNJ

McDonald's Corp. MCD

Merck & Co. Inc. MRK

Microsoft Corp. MSFT

Procter & Gamble Co. PG

SBC Communications Inc. SBC

United Technologies Corp. UTX

Wal-Mart Stores Inc. WMT

Walt Disney Co. DIS

DJIA Holdings as of 4/23/2003

EducateSecurity Name % Net Assets Market Value TickerMicrosoft 3.14 77,028,956 MSFTExxonMobil 2.85 69,768,450 XOMGeneral Elec 2.85 69,912,882 GEWal-Mart Stores 2.61 64,056,780 WMTPfizer 2.32 56,800,524 PFECitigroup 2.19 53,612,172 CJohnson & Johnson 1.97 48,350,859 JNJAmerican Intl Grp 1.75 42,863,040 AIGIBM 1.64 40,139,813 IBMS&P 500 (Fut) 1.6 39,102,525 Merck 1.54 37,764,902 MRKProcter & Gamble 1.38 33,757,365 PGBank of America 1.3 31,830,720 BACVerizon Comms 1.3 31,795,368 VZIntel 1.29 31,649,379 INTCCoca-Cola 1.24 30,454,242 KOCisco Sys 1.2 29,350,368 CSCOSBC Comms 1.01 24,637,964 SBCWells Fargo 0.99 24,333,969 WFCAltria Group 0.97 23,786,147 MO

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S&P 500 Index Return in 1962 -8.7% Return 1962 to 1972 8.1% Return 1962 to 1974 3.1% Return 1962 to 1984 8.0% Return 1962 to 1992 10.7% Return 1962 to 1999 12.2% Return 1999 to 2002 -16.09% Return 1982 to 2002 11.98%

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-60 -55 -50 -45 -40 -35 -30 -25 -20 -15 -10 -5 0 5 10 15 20 25 30 35 40 45 50 55 60

1926 1927 1928192919301931

1932

19331934 193519361937

19381939

1940

1941 1942 19431944

1945

1946

1947

1948 1949

1950

1951

19521953

1954

1955

1956

1957 19581959

1960

1961

1962

1963

1964

19651966

19671968

1969

1970

1971 1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

Large Cap Stock Market Returns1926 - 1999

1998

13.3(Mean)

33.4One Standard

Deviation

-6.9One Standard

Deviation

53.6Two Standard

Deviations

-27.0Two Standard

Deviations

1999

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U.S. Inflation Returns1926 - 1999

-18 -16 -14 -12 -10 -8 -6 -4 -2 0 2 4 6 8 10 12 16 18 22 24

192619271928

19291930193119321933

19341935

1936 19371938

19391940

19411942

194319441945

1946

1947

1948

1949

19501951

19521953

1954

195519561957

19581959196019611962196319641965

19661967

1968

1969

1970

19711972

1973

19741975

1976

1977

1978

19791980

1981

1982198319841985

1986

198719881989

1990

199119921993199419951996

19971998

14 20

3.2(Mean)

7.6One Standard

Deviation

-1.3One Standard

Deviation

12.1Two Standard

Deviations

-5.7Two Standard

Deviations

1999

Investing in Stocks

Stock Market Performance1925 - 1999

Hypothetical value of $1 invested at year-end 1925. Assumes reinvestment of income and no transaction costs or taxes.

$2,846 11.3%

Average Return

EndingWealth

Large Company Stocks 12.6%$6,641Small Company Stocks

1935 1945 1955 1965 1975 1985$0

$1

$10

$100

$1,000

$10,000

1925 1999

Growth and Value Investing1927 - 1999

$.1

$1

$10

$100

$1,000

$10,000

$100,000

$1,189

1927 1937 1947 1957 1967 1977 1987 1999

10.3%

AnnualReturn

EndingWealth

Large Growth

$5,379 12.7%

Large Value

$749 9.6%

$19,764 14.7%

Small Value

Small Growth

Stock Diversification

1 2 4 6 8 16 30 50 100 1000Number of Stocks in Portfolio

Ris

k

Market Risk

Company Risk

Risk of Stock Market Loss over Time1926 - 1999

Periods with Gain

Periods with Loss

100%

60 Fifteen-Year Periods

90%

10%

70 Five-Year Periods

73%

27%

74 One-Year Periods

Do Stock Winners Repeat?Top Ten Performing Stocks 1980 - 1999

Ann

ualiz

ed R

etur

n

Annualized returns of equal-weighted portfolio of top 10 stocks by3-year return and return in subsequent 3-year period (excluding the smallest 20% of the market).

Average Returns

First 3 years 130.9%

-50%

0%

50%

100%

150%

200%

1980 1985 1990 1996

Subsequent 3 years 6.6%

Market Downturns and Recovery 1926 - 1999Downturn

9/29-6/32

6/46-4/47

8/56-2/57

8/57-12/57

1/62-6/62

2/66-9/66

12/68-6/70

1/73-9/74

1/77-2/78

12/80-7/82

9/87-11/87

6/90-10/90

7/98-8/98

34 months -83.4%

-21.0%

-10.2%

-15.0%

-22.3%

-15.6%

-29.3%

-42.6%

-14.1%

-16.9%

-29.5%

-14.7%

-15.4%

Period Length Amount

7 months

5 months

6 months

8 months

19 months

21 months

14 months

20 months

3 months

5 months

2 months

11 months

Recovery

7/32-1/45

5/47-10/49

3/57-7/57

1/58-7/58

7/62-4/63

10/66-3/67

7/70-3/71

10/74-6/76

3/78-7/78

8/82-10/82

12/87-5/89

11/90-2/91

9/98-11/98

Period Length

151 months

5 months

7 months

10 months

6 months

9 months

21 months

5 months

3 months

18 months

4 months

3 months

30 months

Principles of Investing

Power of Reinvesting1979 - 1999

Hypothetical value of $1,000 invested at year-end 1979.

AnnualReturn

$100

$1,000

$10,000

$100,000

1979 1984 1989 1994 1999

$26,817 17.9%

EndingWealth

Stocks with Reinvestment

$7,617 10.7%

Bonds with Reinvestment

$13,615 13.9%

Stocks without Reinvestment

$1,345 1.5%

Bonds without Reinvestment

Importance of Rebalancing

Assumes reinvestment of income and no transaction costs or taxes. Stocks: 50% Large and 50% Small Company Stocks. Bonds: Intermediate-Term Government Bonds.

1979 - 1999

Stock AllocationBond Allocation

Por

tfol

io W

eigh

tings

Target Asset Mix: 50% Stocks, 50% Bonds

50% 50%56%

44%

60%

40%

63%

37%

78%

22%

0%

20%

40%

60%

80%

100%

1979 1984 1989 1994 1999

Dangers of Market Timing

S&P 500 Treasury Bills

Hypothetical Value of $1 Invested from Year-End 1925 - 1999

$2,846

$15.64$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

S&P 500 minusbest 40 months

$17.07

Dangers of Market TimingHypothetical Value of $1 Invested from Year-End 1979 - 1999

S&P 500 Treasury Bills

$26.82

$3.79

$0

$5

$10

$15

$20

$25

$30

S&P 500 minus best 15 months

$6.81

Investor B 10

$4,000

Year-End 1989-1999

$40,000

$133,600

Power of CompoundingHypothetical Investment in Stocks

Investor A 10

$2,000

Year-End 1979-1999

Years Contributing:Annual Amount Contributed:

Total Amount InvestedCompounded Value at Year-End 1999

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$20,000

$295,400

Reduction of Risk over Time1926 - 1999

Each bar shows the range of compound annual returns for each asset class over the period 1926-1999.

1-Year Holding Periods

SmallCompany

Stocks

LargeCompanyStocks

GovernmentBonds

Treasury Bills

-75%

-50%

-25%

0%

25%

50%

75%

100%

125%

150%

20-Year Holding Periods5-Year Holding Periods

Compound Average Return

11.3%12.6% 5.1% 3.8%

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Can You Stay on Track?

$747

$1,091

$600

$800

$1,000

$1,200

$1,400

1971 1972 1973 1974$100

$1,000

$10,000

$100,000

1974 1999

$9,413

Stocks

Bonds50/50 Portfolio

$912

$24,107

$53,378

19941984

OUR JOB

To help you stay on track!

Sum m ary o f the Wor ldSum m ary o f the Wor ld There would be 57 Asians, 21 Europeans, 14 from There would be 57 Asians, 21 Europeans, 14 from

the western hemisphere, including North and South the western hemisphere, including North and South America and 8 from AfricaAmerica and 8 from Africa

51 would be female, and 49 would be male51 would be female, and 49 would be male

70 would be non70 would be non--white, 30 would be whitewhite, 30 would be white

66 would be non66 would be non--Christian and 34 would be ChristianChristian and 34 would be Christian

80 would live in substandard housing80 would live in substandard housing

70 would be unable to read70 would be unable to read

50 would suffer from malnutrition50 would suffer from malnutrition

Only one would have a college educationOnly one would have a college education

Half of the entire village’s wealth would be in the Half of the entire village’s wealth would be in the hands of only 6 people, and all six would be citizens hands of only 6 people, and all six would be citizens of the USof the US