…and how to teach

your kids to avoid them

3 big reasons people fail at investing…

Monetta Money Talk

Why this article?

Investing is my longtime vocation, and helping kids learn about money is my longtime

avocation. One of my biggest messages is DON’T OVERCOMPLICATE THINGS. One of the best

protections against doing so is taking a hard look at why so many people fail.

This article is intended to help parents and grandparents initiate conversations with kids they

love. Use the images here as the basis for conversations. That way, when moments of decision

arise, what springs to mind is “sun and planets” or “farmer’s fields” or “train on the tracks.”

With these images in mind, kids (and people of all ages) can be prepared to see past all the

unnecessary complications that trip up so many people. So, without further ado, let’s get right

to it, with the first big reason people fail….

—Bob Bacarella, founder and co-portfolio manager

Reason People Fail #1

They don’t establish a core portfolio.

To stay on target, you

have to focus on the

center!

The Planetary Portfolio

Like our solar system, a stock portfolio needs a center with enough

gravitational force to be the core around which all other investments

rotate.

That core should track performance of the S&P 500 Index of 500 large

U.S. companies. In our view, the S&P 500 is an ideal “sun” or “core” for an

overall portfolio. Historically, its average return has been about 10% per

year since 1928. We believe approximating the performance of the S&P

500 in a core portfolio is a good fit for most investors.

The core portfolio should be “set it and forget it”…except for adding more

over time. As you get more experienced, you can add “planets” (individual

stocks) that rotate around the core. These are much more prone to

asteroids (bad news in general) or comet strikes (bad news about the

company itself). Always know what you like about each of your planets,

and visit them frequently to make sure they are meeting your

expectations. If they don’t, remove that planet from your portfolio.

But the core?—Don’t remove that any more than you’d remove the sun

from the solar system! 2

The sun represents the core of your investments

Keep investing simple!

Kids conversation starters: CORE PORTFOLIO

• It’s at the center of everything

• It’s always there

• In a “planetary portfolio,” there’s no

solar system without the sun

Planets are investments that orbit the sun

• Start with companies that you know

and understand

• Some might be big, like Jupiter;

others might be small and hot, like

Mercury

• Only add a planet if you do your

homework to understand it and

“visit it” frequently to make sure it’s

meeting your expectations

No matter what happens on the planets, never lose sight of the core

• If a giant storm is raging on Jupiter, or

if a planet that seemed hot has since

cooled, it might be time to remove it

from your portfolio

• Always keep your core portfolio intact

(and add to it!)

500+ stocks in the core (“sun”)

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*Companies listed are examples only and not recommendations for a portfolio.

Reason People Fail #2

They don’t properly diversify.

4

Plant many crops

in many fields!

The Farmer’s Fields

Farmers face many risks. In the best-case scenario, the farmer’s fields yield

an abundant harvest, which then earns a handsome profit when the

farmer sells the crops at market. But there are many problems that can

get in the way of that outcome, including the weather, bug infestations or

harvesting issues.

Farmers are practical. They know things can go wrong. And so they take

steps to address risks they face. They can’t remove the risks, but they can

lessen the likelihood that any one risk factor will wipe them out. One of

the most important ways farmers manage risk is by planting more than

one kind of crop. Why? Because different crops are exposed to different

risk factors.

For example, say a farmer has three fields. He plants soybeans in the first,

wheat in the second and corn in the third. Now, what happens if a

pesticide-resistant bug wipes out his entire soybean field? He’ll lose his

soybeans, but he’ll still have his wheat and corn to harvest and sell.

But what if the farmer planted only soybeans in all three fields? That could have been a disaster. Unless

the farmer had savings, he might not even have enough money to buy seed the next year. He might

have to sell the farm.

Investors need to think like farmers. Don’t plant only soybeans! Stay diversified across multiple “crops”

(companies and industries). One way to do this is to:

1. Invest your core portfolio in the S&P 500 Index; this way, you’ll own 500 “crops” in a single holding.

2. Make sure your core portfolio stays large relative to any other holdings you may add around it.

5

Farmer can’t remove risks, but they can manage them

• What if a bug destroyed a farmer’s

entire soybean crop?

• If the farmer had planted only

soybeans, this could be a disaster

• If the farmer planted soybeans and

other crops, it might be a bad year—

but not a total wipeout

Investors need to think like farmers

Keep investing simple!

Kids conversation starters: DIVERSIFICATION

• Plant multiple crops by staying

“diversified” across many different

“crops”

• Most importantly, make sure your

core portfolio includes hundreds of

different crops (500+ companies)

• If you add more crops, make sure

those are diversified too

Reason People Fail #3

They don’t establish an AIP.

One direction:

To the future!

Trains Run on Tracks but Need Fuel to Move

The most distinguishing characteristic of trains is the fact that

they run on tracks. These tracks are similar to a path toward

your long-term investment goal. The terrain may vary

(investment values may rise or fall), but the one sure thing is

that time will pass. As it does, you want to keep the train

moving down the tracks towards your investment goal.

Reaching your goal will depend on the terrain and your train’s

ability to maintain its speed, power and breaks to stop.

To start on this investment journey you will need fuel,

represented by an initial investment and a fixed amount of

money deposited each month to purchase additional fuel. By

establishing an Automatic Investment Plan, or “AIP,” you’re

regularly fueling your train to help keep it moving along the

tracks.

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There may be times when you want to purchase more fuel (extra investment beyond the AIP)

to take advantage of low fuel prices as the train passes rough terrain. For example, when

market prices decline, these tend to be good opportunities to buy fuel (stocks) at attractive

prices. Adding to your fuel gauge when prices are low may lead to additional power when the

terrain gets better, propelling you faster toward your investment goal.

Also, you may want to increase your AIP contribution when your income rises. (Tip: annually

consider adjusting your AIP contribution to reflect your current income level.) With higher AIP

contributions, you can get your train moving faster and faster over time.

But the most important thing is what you do right now… open an investment account today.

Get your train moving down the tracks with an initial investment in a diversified core

portfolio, and set up an AIP to keep the momentum. All aboard!

Start investing today—then keep up your momentum

• The hardest part of investing is starting —

that’s the fuel that gets your train moving

down the tracks

• Then, an Automatic Investment Plan (AIP)

is the fuel that keeps it moving

• Trains don’t steer!—just keep moving

forward down the tracks

Add fuel when fuel is cheap

• Sometimes, fuel (additions to your

holdings) is cheaper to buy than usual

• Think of these times (“bear markets”) as

rough terrain, when many people want to

get off their trains

• This is a great time to fuel up, so when the

terrain gets better, you’ll be going even

faster

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“It’s time in the market that matters, not timing the market”

• Sticking with an AIP helps you stay focused

on what’s ahead of you, not what’s going on

outside the windows

• Don’t start and stop your AIP based on

what’s happening in the market—just keep

up your momentum

Keep investing simple!

Kids conversation starters: AUTOMATIC INVESTING PLANS

About Monetta

Founded in 1984, Monetta is an investment manager based

in Wheaton, Illinois. We offer two no-load mutual funds: the

Monetta Core Growth Fund and the Monetta Fund.

All too often, people overcomplicate the investment

process. Our goal is to break down investment myths and

concepts to help people make sound long-term investment

decisions. Your financial future starts here.

Low Minimums

Investing doesn’t have to feel out of reach. At Monetta, you

can start with as little as $100 with an automatic investment

plan of $25 or more per month.

Built-In Diversification

The Monetta Core Growth Fund consists of a highly

diversified “passive” component together with an actively

managed component that consists largely of companies

that are household names.

Commitment to Education

We provide ideas and resources for people of all ages to

get started.

Learn more at https://monetta.com.

About Monetta

Please read the Prospectus carefully before you invest. It contains more complete information

about the Monetta Funds, including risks specific to each fund, fees and expenses. A free, hard-

copy of the prospectus can be obtained by calling 1-800-241-9772.

Mutual fund investing involves risk. Principal loss is possible. The Funds may make short-term investments, without limitation, for

defensive purposes, which investments may provide lower returns than other types of investments. The portion of the Monetta Core

Growth Fund that invests in underlying ETF’s that track the Index will be subject to certain risks which are unique to tracking the Index. By

investing in ETF’s, you will indirectly bear your share of any fees and expenses charged by the underlying funds, in addition to indirectly

bearing the principal risks of the funds. Growth-oriented funds may under-perform when growth stocks are out of favor. Please refer to

the prospectus for further details. While the funds are no-load, management and other expenses still apply.

Standard and Poor’s 500® Index is a capitalization-weighted index of 500 stocks. This unmanaged index is designed to measure

performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major

industries. The index was developed with a base level of 10 for the 1941-43 base period. You cannot invest directly in an index.

Past performance does not guarantee future performance. Index performance is not indicative of fund performance. For current

standardized fund performance, please call 1-800-241-9772 or click here.

Diversification does not assure a profit nor protect against loss in a declining market. Periodic investment plans do not assure a profit and

do not protect against a loss in declining markets.

Click here for the Monetta Fund Top Ten Holdings.

Click here for the Monetta Core Growth Fund Top Ten Holdings.

Fund holdings are subject to change and are not a recommendation to buy or sell any security.

Monetta Financial Services, Inc. is the adviser to the Monetta Funds. The Monetta Funds are distributed by Quasar Distributors, LLC.