Money Matters Ppt

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Money Matters

Money Matters

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  • 1. Money Putting your money to work for you Matters ™ 1
  • 2. Your Financial Future Can Start Today • Most people are uncertain when it comes to finances. • You know it’s important to start now – take control of your money and make it work for you. • But navigating the maze of all things financial can be a daunting and confusing journey. Where do you begin? 2
  • 3. Begin With World Financial Group • WFG is dedicated to serving the financial needs of individuals and families from all walks of life who are often overlooked by the financial services industry. • We are driven by our mission to help families achieve financial independence. 3
  • 4. A Different Kind of Company for a Different Kind of Consumer • Everyday our associates in the United States and Canada educate clients and business owners that financial choices made today are critical in the determination of their financial futures. • WFG believes creating a financial strategy is not something reserved for the wealthy; it is an opportunity for all people no matter what their income. 4
  • 5. A Different Kind of Company • There’s no “one size fits all” attitude here - WFG advocates the power of choice for our clients. • WFG is aligned with several leading companies in the financial services industry to provide clients with a broad array of products and services so they can choose the ones that best fit their needs. 5
  • 6. Providers & Products Our provider companies include industry leaders such as: 1 1 1 1 1 Maintains current selling agreement(s) with World Financial Group Insurance Agency, Inc. (WFGIA) and/or World Group Securities, Inc. (WGS), the affiliate broker-dealer of World Financial Group, Inc. 6
  • 7. Providers & Products Products offered through our alliances include: – Mutual Funds2 – College Funding/529 – Annuities2 Plans2 – Life Insurance2 – Pensions/401K2 – IRAs/Roth IRAs2 – Brokerage Services2 – And much more. 2 Securities offered through World Group Securities, Inc. (WGS), Member FINRA, SIPC. WGS Headquarters: 11315 Johns Creek Parkway, Duluth, GA,30097-1517.770.453.9300. WGS is not a licensed insurance entity. Insurance products are offered through World Financial Group Insurance Agency, Inc. (WFGIA). WFGIA is a an insurance agency licensed to conduct insurance business in all states, except in those jurisdictions that prohibit foreign insurance agencies then such business is conducted through duly qualified subsidiary agencies thereof. Headquarters: 11315 Johns Creek Parkway, Duluth, GA, 30097-1517. WorldFinancialGroup.com. 770.453.9300. 7
  • 8. WFG: Investment Reminder • Carefully consider all information before making any investment decisions. • Make sure to ask your WFG associate any questions you may have about the products and services being offered. • If necessary, consult with a tax or legal advisor. • Remember, with any investment there are risks involved. 8
  • 9. WFG: Built on Strength World Financial Group, Inc. is an AEGON company. • AEGON N.V. - – One of the world’s leading life and pension groups, and a provider of investment products – Major operations in the United Sates, the Netherlands and the United Kingdom and a presence in a number of countries including Canada, Hungary, Slovakia, Spain and Taiwan. 9
  • 10. WFG: Built on Strength • AEGON N.V. was ranked one of the top companies in 2007 by Forbes in its annual ranking of the world’s biggest and most powerful public companies.3 • Other AEGON companies include Western Reserve Life Assurance Co. of Ohio, Transamerica Life Insurance Co., Life Investors Insurance Company of America, Transamerica Funds.4 3 The Forbes Global 2000 is a comprehensive list of the world’s biggest and most powerful companies based on a composite measure of sales, market values, assets and profits. Market value as of Feb. 28. Published March 29, 2007 on Forbes.com. 4 All of the companies listed may not be available for World Financial Group Associates to do business with, and are listed here only for the purposes of illustration and information. 10
  • 11. The Baby Boomer Challenge • Social Security – Social Security’s tax income is projected to be insufficient to pay currently scheduled benefits by 2017.5 • Income & Retirement – The median household income reported by Americans ages 65 and older in 2005 was only $26,036.6 – 28% of retirees say they have no savings of any kind.7 5 Social Security Board of Trustees: “Some Improvement in Long-Range Financing Outlook but Deficits Continue,” Social Security Administration News Release, Tuesday, March 25, 2008. 6 U.S. Bureau of the Census, “Income, Poverty, and Health Insurance Coverage in the United States: 2005,” Carmen DeNavas – Walt, Bernadette D. Proctor, Cheryl Hill Lee; issued August 2006. 7 The 2008 Retirement Confidence Survey: “Americans Much More Worried About Retirement, Health Costs a Big Concern,” Employee 11 Benefit Research Institute, April 2008.
  • 12. The Senior Dilemma • Wealth Transfer – Estimates indicate that by 2052 there will be a minimum wealth transfer of $41 trillion.8 – If something is not done now, a substantial amount of this money could be lost to taxation. 8 Why the $41 Trillion Wealth Transfer Estimate is Still Valid, John J. Havens and Paul G. Schervish, Boston College Social Welfare Research Institute, Jan. 6, 2003. 12
  • 13. The Generation X & Y Factors • Retirement Savings – 49% of workers ages 25-34 and 33% of workers age 35-44 have less than $10,000 saved for retirement.9 9 Retirement Confidence Survey®, 2008 RCS Fact Sheet, Saving for Retirement in America, Employee Benefit Research Institute and Mathew Greenwald and Associates, Inc., April 2008. 13
  • 14. Consumer Challenges: Debt & Savings • Consumer debt has been steadily rising, topping $2.5 trillion by year-end 2007.10 • Disposable personal income increased in February 2008, but personal savings as a percentage of personal income was only 0.3%.11 10 U.S. Federal Reserve, Feb. 7, 2008 11 U.S. Department of Commerce, Bureau of Economic Analysis, “Personal Income and Outlays: February 2008”, released March 28, 2008. 14
  • 15. College, Consumer Retirement and Challenges: the Unexpected • 2007-2008 college year: The average cost – including room, board and fees - for a four-year public university was $13,589 and for a four-year private college it was $32,307.12 • A married couple, both 45 years old, earn $100,000 a year and plan to retire in 20 years, with average inflation of 4.5% over the next two decades, will need more than $241,000 a year to equal the current $100,000 income. • Without proper planning, an unexpected death could cause your family serious financial concerns. 12 Trends in College Pricing, The College Board, 2007. 15
  • 16. Help Make Your Money Work When investing, there are certain risks, fees and charges, and limitations that one must take into consideration. 14 The WFG Financial Dream Map is a suitability and needs analysis that is based upon information obtained from sources believed to be complete and accurate. However, discuss any legal, tax or financial matter with the appropriate professional. Neither the information 16 presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any specific security or financial service.
  • 17. Cash Flow • An important step on the path to financial independence is increasing the amount of money available to you. • The extra funds can help you reduce debt and, more importantly, build a nest egg. 17
  • 18. Cash Flow • To achieve this: – Manage expenses by: • Spending less then you earn • Creating a budget • Raising deductibles to an appropriate level on insurance • Dropping Private Mortgage Insurance when equity in your home reaches 20% of the home’s value • Canceling credit life insurance on auto loans, mortgages and credit cards • Exploring a qualified plan option • Earning tax deductions by starting your own business 18
  • 19. Cash Flow • To achieve this: – Increase your available income by: • Taking on a second career or part-time opportunity for additional income • Consulting with your tax advisor about adjusting your W-2 allowances if you expect a tax refund. 19
  • 20. Proper Protection • The Principle of Building Equity – This principle illustrates your need to protect you and your family should you die too soon or live too long. Generally Generally Less More Secure Secure YOUNGER OLDER Taking Care of Your Family Taking Care of Your Future 20
  • 21. Proper Protection • How much life insurance is enough? – Factors to take into consideration to identify how much insurance is enough include: • Age • Medical condition • Number of dependents • Income/Current financial status – A basic rule of thumb is to have life insurance to provide about 10 times your family income. – There are limitations to the protection that life insurance can offer, so please discuss these with your WFG associate. 21
  • 22. Debt Management • One of the biggest problems facing consumers today is debt. • It’s important to create a strategy to eliminate or consolidate debt. • Pay Off Credit Card/Consumer Debt 22
  • 23. Debt Management • Credit Card Debt Facts & Figures – Average American household credit card debt is more than $8,500.14 – At an 18% interest rate paying a 2.5 percent minimum monthly payment of $112.50 on a beginning balance of $4,500, it will take more than 25 years to pay off the debt while paying more than $6,000 in interest.15 – By paying slightly more - $145 per month - the debt could be paid in less than four years with approximately $1,600 in interest paid.15 14 Scary Debt Stats, The Motley Fool, April 2008, fool.com 15 “Credit Card Calculator: The True Cost of Paying the Minimum,” Bankrate.com. 23
  • 24. Debt Management • Strive to pay off credit card/high-interest loan debt sooner rather than later. • Pay more than the minimum payment on credit cards/loans with high interest rates. • Once one of the high-interest credit cards/loans are paid, begin paying off the one with the next highest interest. 24
  • 25. Debt Management • Transfer credit card/loan balances to a card with a promotional, no-fee transfer rate with a lower interest rate. • For any account charging more than 14% in interest call the creditor to ask for a lower rate. • If you are a homeowner, investigate taking out a low-interest home equity loan to pay off your debt. The interest on equity loans is tax deductible. 25
  • 26. Debt Management • Consider refinancing your mortgage – Consider the type of mortgage, the mortgage amount, refinancing fees and how long you plan to live in the home. – Bottomline in deciding whether to refinance: Determine how much time it will take to recoup expenses associated with refinancing and how much you will save. 26
  • 27. Asset Accumulation & Preservation • To provide security later in life, it’s important to have an asset accumulation plan in place designed to outpace inflation and reduce taxation. • When building a program consider: – How many years you may be living in retirement – How much it will cost to live comfortably during those years 27
  • 28. Asset Accumulation & Preservation • The Rule of 72 16 – If you divide 72 by the interest rate being earned on your savings/investment, you will obtain the number of years required for your initial invest- ment to double. 16 The Rule of 72 is a mathematical concept that approximates the number of years it would take to double the principle at a con- stant rate of return. The performance of investments fluctuate over time, and as a result, the actual time it will take an investment to double in value cannot be predicted with any certainty. Additionally, there are no guarantees that any investment or savings program can outpace inflation. Please note that high risk has been historically associated with higher rates of return. 28
  • 29. Asset Accumulation & Preservation • The Rule of 72 17 – In the following chart, see how much can be earned over time with an initial investment of $10,000 Age 4% Age 6% Age 8% Age 12% Money doubles every 18 years Money doubles every 12 years Money doubles every 9 years Money doubles every 6 years 29 $10,000 29 $10,000 29 $10,000 29 $10,000 47 $20,000 41 $20,000 38 $20,000 35 $20,000 65 $40,000 53 $40,000 47 $40,000 41 $40,000 65 $80,000 56 $80,000 47 $80,000 65 $160,000 53 $160,000 59 $320,000 65 $640,000 17 All figures are for illustrative purposes only and do not reflect an actual investment in any product. They do not reflect the performance risks, expenses or charges associated with any actual investment. Past performance is not an indication of future performance. The Rule of 72 is a mathematical concept that approximates the number of years it would take to double the principle at a constant rate of return. The performance of investments fluctuate over time, and as a result, the actual time it will take an investment to double in value cannot be predicted with any certainty. Additionally, there are no guarantees that any investment or savings program can outpace inflation. Please note that high risk has been historically associated with higher rates of return. 29
  • 30. Asset Accumulation & Preservation • The following chart is a historical view of different investment markets from 1926 to 2007. The chart illustrates how much $1 invested could have grown based on investment in stocks, bonds or treasury bills, and how that compares to the rate of inflation. • Remember: There are certain risks when investing and past performance does not guarantee future returns. 30
  • 31. Stocks, Bonds, Bills, and Inflation 1926–2007 $15,091 $10,000 $3,246 Compound annual return 1,000 • Small stocks 12.5% • Large stocks 10.4 • Government bonds 5.5 • Treasury bills 3.7 • Inflation 3.0 100 $79 $20 $12 10 1 0.10 1926 1936 1946 1956 1966 1976 1986 1996 2006 ©2008 Morningstar, Inc. All rights reserved. Used with permission. Note: This chart does not reflect past or future performance of any specific product (Data Jan.1,1926-Dec.31, 2007). This chart is for illustrative purposes only and is not indicative of any investment. The data assumes reinvestment of all income and does not account for taxes or transaction costs. The average return represents a compound annual return. Government bonds and Treasury bills are guaranteed by the full faith and credit of the United States government as to the timely payment of principal and interest. Bonds in a portfolio are typically intended to provide income and/ or diversification. U.S. government bonds may be exempt from state taxes and income is taxed as ordinary income in the year received. With government bonds, the investor is a creditor of the government. Stocks are not guaranteed and have been more volatile than the other asset classes. Large company stocks provide ownership in corporations that intend to provide growth and/or current income. Small company stocks provide ownership in corporations that intend to seek high levels of growth. Small stocks are more volatile than large stocks and are subject to significant price fluctuations, business risks, and are thinly traded. Capital gains and dividends received may be taxed in the year received. Underlying data is from the Stocks, Bonds, Bills, and Inflation® (SBBI®) Yearbook, by Roger G. Ibbotson and Rex Sinquefield updated annually. An investment cannot be made directly in an index. Past performance is no guarantee of future results. Source: In this example, small stocks are represented by the fifth capitalization quintile of stocks on the New York Stock Exchange (NYSE) for 1926-1981 and the performance of the Dimensional Fund Advisors, Inc. (DFA) U.S. Micro Cap Portfolio thereafter; large stocks are represented by the Standard & Poor’s (S&P) 500®, which is an unmanaged group of securities and considered to be representative of the stock market in general; government bonds are represented by the 20-year U.S. government bond, Treasury bills by the 30-day U.S. Treasury bill and inflation by the 31 Consumer Price Index.
  • 32. Asset Accumulation & Preservation • Besides procrastination, an enemy to building and maintaining savings is taxation. • Harness the power of tax advantages. – The following chart shows how much someone in the 35% tax bracket (combined federal and state) would have to set aside each month to accumulate $1 million in 30 years in taxable versus non-taxable scenarios. 32
  • 33. Asset Accumulation & Preservation $1,000,000 RETIREMENT GOAL $1,843 $1,455 $1,179 $706 4% 8% Rate of Return and Rate of Return and 4% 8% No Tax Deferral – NoTax Deferral – Rate of Return & Rate of Return & Taxed on a Taxed on a Accumulation Accumulation current basis18 current basis18 Tax-Deferred18 Tax-Deferred18 SCENARIO 1 SCENARIO 2 No Tax Deferral Tax-Deferred Required Savings Per Month for 30 Years 18 Assumes 35% tax bracket. The rates of return chosen are for illustrative purposes only, does not reflect the actual investment in any product and should not be viewed as an indication of performance for any particular investment. They do not reflect the performance risks, expenses or charges associated with any actual investment. 33
  • 34. Asset Accumulation & Preservation • The High Cost of Waiting – Time can be the worst enemy or the greatest ally. – The key to building an asset accumulation program is to begin saving now. – Following is an example of monthly retirement savings required to achieve a $1 million retirement goal with an interest rate of 8%, tax deferred. 34
  • 35. Asset Accumulation & Preservation • Example of Monthly Retirement Savings 19 Years Until Retirement 40 $286.45/mo. 35 $435.94/mo. 30 $670.98/mo. 25 $1,051.50/mo. 20 $1,697.73/mo. 15 $2,889.85/mo. 10 $5,466.09/mo. 5 $13,609.73/mo. Put Time On Your Side. Get Started Now. 19 All figures are for illustrative purposes only and do not reflect an actual investment in any product. They do not reflect the performance risks, expenses or charges associated with any actual investment. Past performance is not an indication of future performance. 35
  • 36. Asset Accumulation & Preservation • Don’t let a lifetime of successful savings be devoured by taxes, lawyers and unintended heirs. A proper estate plan can take care of your family during your life and after your death. 36
  • 37. Asset Accumulation & Preservation • A pitfall of not having an adequate estate plan. 20 Your Life Insurance • Your Business Your Home • Your Pension Your Personal Assets & Real Estate SETTLEMENT COSTS Income Taxes Probate on Pensions & Estate Tax Costs Annuities up to 3 to 7%21 up to 35%21 48%21 or more of the plus Estate total estate Tax up to value22 48% Your Heirs Receive What Is Left. 20 Strategic estate planning may include the proper use of: life insurance, wills, trusts, gifts, charitable donations, appropriate ownership of property, implementation of buy-sell agreements and should include consultation with an attorney knowledgeable in estate planning. Not all of these strategic-planning tools are offered by or through WFG or WGS. Tax/legal advice not offered by or through WGS, WFG or any affiliated companies. Please consult with your representative for services he/she can offer. 21 Under current 2006 U.S. tax law. Due to legislative activity announced in Spring 2001, estate tax rates are being reduced toward complete repeal by 2011. Tax and/or legal advice not offered by WFG, WGS or their affiliated companies. Please consult with your personal tax professional for additional guidance regarding the estate tax and other tax matters. 22 “Skipping Out on Probate Costs,” Steven Merkel, CFP, ChFC, Dec. 13, 2004, Investopedia.com 37
  • 38. Make Your Money Work For You • What are your next steps? – Share information today to begin your WFG Financial Dream Map™ – Set a follow-up appointment to review the results of your personalized analysis. – Implement your personalized WFG Financial Dream Map™ – Put your WFG associate in your referral network of trusted professionals. 38
  • 39. World Financial Group, Inc. (WFG) is a financial services marketing company whose affiliates offer life insurance and a broad array of financial products and services. Securities are offered through World Group Securities, Inc. (WGS), Member FINRA/SIPC. Insurance products are offered through World Financial Group Insurance Agency, Inc. (WFGIA) WFG, WGS, WFGIA are affiliated companies. Headquarters: 11315 Johns Creek Parkway, Duluth, GA 30097-1517, PO Box 100035, Duluth, GA 30096-9403. Phone: 770.453.9300. WorldFinancialGroup.com ©2008 World Financial Group, Inc. 0455M/8.08