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					Wealth


Wisdom
           Specialized Investment Services
                6501 Tinker Diagonal
              Midwest City, OK 73110
                    405-737-0006

                   A Division of
           Tinker Federal Credit Union
    “Helping our members achieve their goals
            and realize their dreams.”

     Securities and investment advisory services are offered through
RAYMOND JAMES FINANCIAL SERVICES, INC. Member FINRA/SIPC.
 Not NCUA or federally insured. NOT GUARANTEED or an obligation of
     the credit union or any affiliated entity. Subject to risk including the
                          possible loss of principle.
“Never spend your money before
you have it.” – Thomas Jefferson
           Develop Goals
• S.M.A.R.T.
  – Specific
  – Measurable
  – Attainable
  – Realistic
  – Time bound
• Prioritize goals – which ones are
  absolutely necessary?
         Emergency Fund
• Save enough to cover 3 to 6 months of
  expenses in an emergency fund.
• This fund should be kept in an account
  that provides liquidity and low risk.
    Emergency Fund Savings
         Alternatives
• Savings account at a bank or credit
  union.
• Money market account vs. money
  market mutual fund.
• CD
• Is it FDIC or NCUA insured?
      Prepare for Emergencies
• Have a list in a safety deposit box or fire safe
  of the following:
  – Account numbers, beneficiaries, date
    opened/closed
  – Contacts (financial & insurance planners,
    lawyers, doctors, vet, etc.)
  – Insurance policy information
  – Location of wills, trusts, etc. or copies
  – Phone numbers and addresses for all accounts &
    contacts.
                 Insurance
 • Be sure you have adequate insurance
   so an unfortunate event does not
   destroy your families future.
    – Life
    – Auto & Home
    – Health
    – Long Term Care
    – Disability

www.ok.gov/oid         http://www.insureuonline.org/
    Know Where You Stand
• Determine net worth
• Summarize debt
  – Balance
  – Interest rate (% & fixed or variable)
  – Minimum payment
  – Secured or unsecured
  – Available credit
                Budgeting
•   Worksheet
•   Envelope system
•   www.powerpay.org
•   www.balancepro.org
•   Be realistic

    “Budget: a mathematical confirmation of
       your suspicions.” – A.A. Latimer
            Reduce Debt
• After paying monthly bills, focus on
  reducing debt.
  – Example: If you pay $100 per month on a
    $5000 credit card financed at 18%, it will
    take you 8 years to pay it off. If you add
    $15 per month to your payment, you will
    save $1154 and 2 years!
  – Recognize “good” debt versus “bad” debt.
   Debt Reduction Methods
• Pay down debt with highest interest rate
  first.
• Or, pay down lowest balance debt first
  then move payment to next lowest
  balance.
• Or, use a debt consolidation loan.
               Credit Score
• Review and repair your credit report
  – www.annualcreditreport.com
  – www.balancepro.net
  Your can increase your score by:
    Making timely payments
    Having low or no consumer debt
    Only have 2 to 4 credit accounts with balances
    below 60% of limit (Older accounts are better)
    More tips at www.myfico.com
  Be wary of debt settlement companies
Your FICO score is determined
     using the following:
•   35% payment history
•   30% amount owed
•   15% length of credit history
•   10% new credit (credit inquiries)
•   10% types of credit used
Savings
        Pay Yourself First
• Put a portion of earnings in savings
  every pay period
• Use payroll deduction or automatic
  transfer
• Do this before spending any of your pay
  so you will grow accustomed to
  budgeting around it.
             Take the Match
• Contributions to a TSP, 401(k), or other
  employer sponsored retirement plan can
  reduce your taxable income.
  – If you are in a 25% federal tax bracket and a 6%
    state bracket, contributing $1 to your 401(k)
    would only reduce your take home pay by $0.69
  – If your employer offers matching contributions,
    $2 of savings could cost you only $0.69!
   Real Cost of a TSP/401(k) Withdrawal
                                                         Over a 20-year retirement, it could
                                                          generate $232,596 in income3
                    If you left that money in your TSP, it
                    would be worth $123,206 by retirement
                    But, because of
                    taxes and
                    penalties, you
                    have to take
You pay the travel $8,333 from your
 company $5,000     plan to get $5,000.
 for your vacation


            $5,000                  $8,333             $123,206 $232,596
1) Assuming the 25% federal tax bracket, 5% state taxes and the 10% early distribution penalty. 2) $8,333
growing at 8% for 35 years. 3) $123,206 returning 7% annually paid out in equal installments over 20 years.
All rates of return are hypothetical and not meant to represent any particular investment.
     Millionaire by retirement?

Starting Age    Monthly
                Investment
16              $112
25              $247
35              $611
45              $1,629
55              $5,485
  Compounding – Reason to Start Early
                                                     Day                            Amount                                        Day                                    Amount
If you                                                  1                            $  .01                                        16                           $327.68
were offered                                            2                               .02                                        17                            655.36
$1,000 today…                                           3                               .04                                        18                          1,310.72
                                                        4                               .08                                        19                          2,621.44
…or one penny                                           5                               .16                                        20                          5,242.88
on the promise                                          6                               .32                                        21                         10.485.76
that it would be                                        7                               .64                                        22                         20,971.52
doubled every                                           8                              1.28                                        23                         41,943.04
day for a month…                                        9                              2.56                                        24                         83,886.08
                                                       10                              5.12                                        25                        167,772.16
…which would                                           11                             10.24                                        26                        335,544.32
you choose?                                            12                             20.48                                        27                        671,088.64
                                                       13                             40.96                                        28                      1,342,177.28
                                                       14                             81.92                                        29                      2,684,354.56
                                                       15                            163.84                                        30                    5,368,709.12

     This example is compounded and is provided for illustrative purposes only. It is not intended to indicate the performance of a particular investment. Generally, mutual funds do not offer a fixed
     rate of return. An investor’s principal is not guaranteed or protected from a decline. The growth of your assets will be based on actual rate of return provided by the investment you choose.
Ms. Money and
 Mr. Fastcar
    Match Savings to Goals
• Develop a timeline of financial goals
• Savings devoted to longer term goals
  should be in more aggressive
  investments (relative to your risk
  tolerance)
• Shorter term goals should be matched
  up to savings in less aggressive
  vehicles.
    Be An Informed Investor
• Before you invest, investigate
  – Visit www.finra.org and utilize the
    “BrokerCheck” & “Investor Information”
    sections.
  – www.investedok.org is a public outreach
    website sponsored by the Oklahoma
    Department of Securities
    Don’t Forget Today’s Financial
              Lessons
•   Set Financial Goals
•   Prepare For Emergencies
•   Know Your Assets & Liabilities
•   Create a Budget
•   Reduce Debt/ Improve Credit Score
•   Pay Yourself First
•   Take the Match
•   Don’t touch retirement savings until you are retired!
•   Start NOW!

				
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posted:3/25/2011
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