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Wealth Accumulation Model
 

Wealth Accumulation Model

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A detailed explanation of the importance of financial planning.

A detailed explanation of the importance of financial planning.

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    Wealth Accumulation Model Wealth Accumulation Model Presentation Transcript

    • WEALTHACCUMULATION MODEL
    • WEALTH ACCUMULATION MODEL Imagine this is your lifeline!
    • WEALTH ACCUMULATION MODEL Your current age is 25, and by this age you would have accumulated for yourself current assets of your own (e.g.: savings, investments, property) Current AssetsCurrent Age (E.g.: 25)
    • WEALTH ACCUMULATION MODEL Your intended retirement age is 62, and by this age Future you would have Assets accumulated more assets for yourself! Current AssetsCurrent Age Retirement Age (E.g.: 25) (E.g.: 62)
    • WEALTH ACCUMULATION MODEL What is your Financial Goal? Financial Goal = Financial Independence Future Assets Current AssetsCurrent Age Retirement Age (E.g.: 25) (E.g.: 62) What is your financial goal when you retire? What do you want to achieve then? For many, achieving their financial goal means being financially independent.
    • WEALTH ACCUMULATION MODEL What is your Financial Goal? Financial Goal = Financial Independence Future + $$ + Investments Assets $$ Invested at 5% p.a. S$1 million  $50K Current S$5 million  $250K Assets Current Age Retirement Age (E.g.: 25) (E.g.: 62)Let’s look at a typical Singaporean financial goal:1. Have a house fully paid for2. Some amount of savings3. Some amount of investments: • If we invest our money with returns of 5% p.a. • $1million invested gives us  $50,000 • $5million invested gives us  $250,000
    • WEALTH ACCUMULATION MODELTo accumulate this wealth, What is your Financial Goal? what do you need? Financial Goal = Financial Independence Time + Future + $$ + Investments Assets $$ Invested at 5% p.a. S$1 million  $50K Current S$5 million  $250K Assets Current Age Retirement Age (E.g.: 25) (E.g.: 62) Without time and being physically able to accumulate, you are unable to reach your financial goal.
    • WEALTH ACCUMULATION MODELTo accumulate this wealth, What is your Financial Goal? what do you need? Financial Goal = Financial Independence Time + Future + $$ + Investments Assets $$ Invested at 5% p.a. S$1 million  $50K Current S$5 million  $250K Crucial Period Assets Current Age Retirement Age (E.g.: 25) (E.g.: 62) Therefore, the next 37 years of your life is crucial!
    • WEALTH ACCUMULATION MODELTo accumulate this wealth, What is your Financial Goal? what do you need? Financial Goal = Financial Independence Time + Future + $$ + Investments Assets $$ Invested at 5% p.a. S$1 million  $50K Current S$5 million  $250K Crucial Period Assets Current Age Retirement Age (E.g.: 25) (E.g.: 62) But what may happen And stop you from that could halt this achieving your financial whole process? goal?
    • WEALTH ACCUMULATION MODELTo accumulate this wealth, What is your Financial Goal? what do you need? Financial Goal = Financial Independence Time + Future + $$ + Investments Assets $$ Invested at 5% p.a. S$1 million  $50K Current S$5 million  $250K Crucial Period Assets Current Age Retirement Age (E.g.: 25) (E.g.: 62) What may happen that could halt this whole process? 1. Premature Death These are the 3 events that 2. Critical Illness may stop you from achieving 3. Total & Permanent Disability your financial goals. The risks that these may happen are one of the concerns of people.
    • WEALTH ACCUMULATION MODELTo accumulate this wealth, What is your Financial Goal? what do you need? Financial Goal = Financial Independence Time + Future + $$ + Investments Assets $$ Invested at 5% p.a. S$1 million  $50K Current S$5 million  $250K Crucial Period Assets Current Age Retirement Age (E.g.: 25) (E.g.: 62) What may happen that could halt this whole process? Concern #1: Risk 1. Premature Death 2. Critical Illness Risk Management 3. Total & Permanent Disability What financial planning does for you is to help you manage these risks.
    • WEALTH ACCUMULATION MODELTo accumulate this wealth, What is your Financial Goal? what do you need? Financial Goal = Financial Independence Time + Future + $$ + Investments Assets $$ Invested at 5% p.a. S$1 million  $50K Current S$5 million  $250K Crucial Period Assets Current Age Retirement Age (E.g.: 25) (E.g.: 62) What may happen that could halt this whole process? Concern #1: Risk 1. Premature Death 2. Critical Illness Risk Management 3. Total & Permanent Disability Concern #2: Wealth The second aspect that Accumulation most people care about is wealth accumulation.
    • WEALTH ACCUMULATION MODELTo accumulate this wealth, What is your Financial Goal? what do you need? Financial Goal = Financial Independence Time + Future + $$ + Investments Assets $$ Invested at 5% p.a. S$1 million  $50K Current S$5 million  $250K Crucial Period Assets Current Age Retirement Age (E.g.: 25) (E.g.: 62) is This how you calculate your monthly cash flow. What may happen that could halt this whole process? Concern #1: Risk 1. Premature Death Only when you have positive savings 2. Critical Illness monthly then you are able to do Risk Management 3. Total & Permanent Disability something to multiply it. Concern #2: 1. Cash Flow = Income - Expenses Wealth Accumulation Positive Asset Investment Accumulation Savings Multiplication
    • WEALTH ACCUMULATION MODELTo accumulate this wealth, What is your Financial Goal? what do you need? Next information you need to know is your net worth. Financial Goal = Financial Independence Time + Many of us have assets locked up somewhere. + $$ + Investments Future E.g.: property, investments, fixed deposits. Assets $$ Invested at 5% p.a. S$1 million  $50K If inflation is Crucial Period 5% this year. If your fixed deposits are only Current expected to be S$5 million  $250K Assets you interest of 0.25%, you are losing 4.75% of the value of your giving money to inflation! Current Age Retirement Age (E.g.: 25) (E.g.: 62) You need to protect your hard-earned savings and make it grow instead of allowing its value toprocess?that could halt is why you need to park your assets depreciate. That What may happen this whole Concern #1: Risk 1. Premature Death to make it work harder for you. somewhere 2. Critical Illness Risk Management 3. Total & Permanent Disability Concern #2: 1. Cash Flow = Income - Expenses Wealth 2. Net Worth = Assets - Liabilities Accumulation
    • WEALTH ACCUMULATION MODEL To accumulate this wealth, What is your Financial Goal? what do you need? Financial Goal = Financial Independence Time + Future + $$ + Investments Assets $$ Invested at 5% p.a. S$1 million  $50K Current S$5 million  $250K Crucial Period Assets It is important to know what current existing arrangements and Age Current policies you have and how Retirement Age (E.g.: 25) (E.g.: 62) much you are covered for. What may happen that could halt this whole process?If your amount of protection 1. Premature Deathwhat you Concern #1: Risk coverage is need, you will have a peace of mind. If not, it’s 2. Critical Illness Risk Management Protection > Needs time to do something about it. Disability 3. Total & Permanent • Help you to save on the unnecessary Concern #2: 1. Cash Flow = Income - Expenses Protection = Needs Wealth 2. Net Worth = Assets - Liabilities Accumulation • Good to know 3. Existing Arrangements/ Policies Protection < Needs • Help you to do something about it
    • WEALTH ACCUMULATION MODELTo accumulate this wealth, What is your Financial Goal? what do you need? Financial Goal = Financial Independence Time + Future + $$ + Investments Assets $$ Invested at 5% p.a. S$1 million  $50K Current S$5 million  $250K Crucial Period Assets Lastly, do you have any immediate Current Age Retirementconcerns regarding your finances Age (E.g.: 25) (E.g.: 62) over the next 12 months? What may happen that could halt this whole process? Concern #1: Risk 1. Premature Death E.g.: Getting married, buying a 2. Critical Illness Risk Management starting a business. house, 3. Total & Permanent Disability If so, we are able to make Concern #2: 1. Cash Flow = Income - Expenses Wealth appropriate planning for it as well. 2. Net Worth = Assets - Liabilities 3. Existing Arrangements/ Policies 4. Any Other Immediate Concerns
    • WEALTH ACCUMULATION MODELTo accumulate this wealth, What is your Financial Goal? what do you need? Financial Goal = Financial Independence Time + Future + $$ + Investments Assets $$ Invested at 5% p.a. S$1 million  $50K Current So what is the next step from now? Crucial Period S$5 million  $250K Assets Arrange for a financial analysis to be done. Current Age Retirement Age (E.g.: 30s) (E.g.: 60s) Start early. What may happen that could halt this whole process? Concern #1: Risk 1. But it’sDeath Premature never too late now. 2. Critical Illness Risk Management 3. Total & Permanent Disability Concern #2: 1. Cash Flow = Income - Expenses Wealth 2. Net Worth = Assets - Liabilities 3. Existing Arrangements/ Policies 4. Any Other Immediate Concerns