Investing Seminar by SEC Commissioner Atkins, Part I

by Ryan Guina

Last week, I attended a financial seminar put on by the Commissioner of the SEC, Mr. Paul Atkins. This is a recap of the seminar, and is based on the notes I took.

In Part I, I will cover the sections ‘What is the SEC,’ ‘Why Invest?’ ‘Where to Begin,’ ‘Investment Choices,’ and ‘What Investments are Right for Me?’

In Part II, I will cover the sections ‘What to Watch For,’ ‘What to do Before Investing,’ ‘What to do After Investing,’ and ‘Types of Scams.’

What is the SEC and what does the SEC do?

  • The SEC is a government agency that was formed after the stock market crash in 1929. They are basically the policemen of the stock market. They have prosecutorial powers and the civil authority to sue persons and institutions (but not to inflict punishment). They also monitor company info for truth and accuracy and promote financial education. For more information visit the SEC website.

Why Invest?

  • Money Grows
  • For a comfortable retirement: Commissioner Atkins mentioned the bleak future for Social Security and that it will not be much, if anything, by the time most of the audience are eligible to receive it (most were between ages 25-45), and our children may not even have it.
  • Education costs
  • Family costs
  • For a rainy day
  • Make your money work for you
  • It makes the economy work by creating jobs and helping companies grow (Here he showed a movie clip featuring Gordon Gecko’s ‘Greed is Good‘ speech from the movie Wall Street).

Where to Begin?

  • Start today: Never too late, too little
  • Determine your Goals
  • Make a Savings Plan: set up an automatic savings plan (such as an auto investment in your company’s 401K Plan or the TSP, which he personally uses)
  • Invest in appreciable assets (A car is not usually appreciable unless it is a collectible; he mentioned looking into stocks, bonds, funds, real estate, gold, savings accounts, etc.)
  • Gather Information
  • Be skeptical (don’t believe every talking head on TV, or every article in print)
  • Diversify: Don’t have all your eggs in one basket. He specifically mentioned that thousands of people lost their nest eggs when companies such as Enron and WorldCom went under.
  • Understand Risks associated with the type of investment you choose

Where to Begin? (Where Do I Purchase Investments)

  • Through retirement Plan at Work
  • Directly from fund company
  • Broker: Ask your broker these important questions:
    • How much are you paying them?
    • Who else pays them?
    • Are they acting as agent/principal
  • Report any problems in writing
  • Research your broker through the National Association of Securities Dealers.

Investment Choices

  • Stocks: Ownership in the company; Risks, there is usually no recourse against bankruptcies
  • Bonds: A promise to receive payment for debt; more security, sometimes insured, possibility of prepayment
  • Funds: a grouping of stocks, bonds, or other securities in one investment; usually a safer form of investment compared to individual stocks, as they are typically diversified

What Investments are Right for Me?

  • Determine your Objectives:
    • Income: Short Term Needs
    • Growth: Long Term Needs
  • Objectives: Determine the amount of risks to take.
  • Stock market: Derivatives or Funds
  • Mutual Funds – questions to ask:
    • Load vs. no load
    • Management fees
    • Redemption Fees
    • Expenses
    • Fund Objectives
    • Can still lose Money
  • Treasury Bonds: Guaranteed, but do not make large amounts if interest
  • CDs: Guaranteed, but do not make large amounts if interest
  • Savings Account: Guaranteed, but do not make large amounts if interest
  • Gold
  • Mattress: no gains

Remember, there are risks associated with all types of investing, from losing your money through loss of value in the stock market to not keeping up with inflation. It is your job to determine the associated risks and determine the amount of risk you should take.

*Disclaimer: This post is based upon handwritten notes and my memory from the seminar. This should not be interpreted to represent the official stance of the SEC. Please see their website for their official views.

Published or updated December 9, 2010.
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