Welcome to Our Workshop – “15 Financial Myths…Demystified.” My name is _________ and I am with AXA Advisors, LLC. Before we start the main part of our presentation, let me take a minute or two to outline what we will be talking about today.
If you are like most people, you probably have misconceptions about planning and may be unaware of the appropriate strategies to move toward your goals. What we are going to do today is go through 15 of the most common financial myths and then tell you the truth about your planning options. We are going to talk about strategies for [choose topics from list in slide]. The goal is to be able to give you the information you need to help you better enhance and protect your assets…and make smart financial decisions.
We have put together some materials for you. They are all developed for educational purpose. The workbook is a copy the presentation with plenty of room to make notes. There is also a “Planning Checklist” to help you assess your needs which we could go over at the end of the seminar/workshop.
The first group of Myths we are going to talk about today relate to Estate Planning.
[Read slide.] How many of you think this is true? [Ask for show of hands.]
Its false. Many people would be surprised to learn just how much of an ‘estate’ they actually have. For some of you, just the value of your home and the amount of your life insurance policy makes for an estate of over $1 million. Take a look at the graphic here and you see that if you add up all of your assets you have an estate worthy of strategic planning and protection. If you don’t evaluate your worth and implement an estate planning strategy, your estate could lose up to 50% after taxes have been taken out. That means a smaller inheritance for your loved ones. And you’ve worked too hard to see taxes become the major beneficiary of your assets, haven’t you? Knowing that you have an estate worth protecting is the first step. Now you’ve got to implement strategies to help preserve it. A few that can help relieve some of the federal and estate planning tax obligations include: Marital Trusts, Annual Gift Tax Exclusion, Charitable Giving, and Life Insurance.
[Read slide.] How many of you think this is true? [Ask for show of hands.]
Just having a will isn’t enough. You have to revisit the conditions of the will as your circumstances change. If not, your will could no longer be valid and could allow the state to determine the allocation of your assets. An invalid or incomplete will could also leave your estate in probate for years, subjecting the estate to income as well as estate taxes. You should consider supplementing your will with estate planning strategies. One way to do this is by placing a portion of your life insurance in an irrevocable trust. Assets placed into a properly structured irrevocable trust are permanently removed from your estate, and therefore not subject to current estate taxes. However, it also means you lose access to the assets. Thus, careful planning is needed.
[Read slide.] How many of you have heard this said by family or friends? [Ask for show of hands.]
By leaving everything to your spouse, you could cost your heirs large amounts in estate taxes. But, by using your Unified Tax Credit you may be able to leave more of your estate with your heirs and away from Uncle Sam. The Unified Tax Credit is the set amount the IRS allows you to pass on to your heirs tax free. Every person is entitled to exempt $2,000,000 of his/her estate from federal estate and gift taxes in 2006. So, if you are married and both you and your spouse use your credit, you can give up to $ 3 million to your heirs — all free of estate tax. Let me show you how this works…
[Go through figures on each chart] As you can see, the difference is significant.
Next, let’s talk about some of the Myths associated with insurance.
[Read slide.] How many of you think this? [Ask for show of hands.]
The fact is that group policies offer minimal and restrictive coverage. If you leave your job for any reason, even retirement, you may lose coverage. You may have to convert the coverage to an individual policy or lose it. And when you get older, life insurance becomes more expensive, if not difficult, to get. Group term insurance also imposes limitations on the amount you are eligible for. Often, this is determined by a salary-related formula that does not consider your individual need for coverage. It may not offer you enough to care for your loved ones when they need it the most. To best secure your family’s future, its important to have life insurance coverage that offers more. It provides you with the customized coverage your family needs and can also serve as a versatile tool to address other needs.
[Read slide.] How many of you think that as long as you have medical insurance you’ll be okay? [Ask for show of hands.]
Long term care is defined as skilled care provided either in the home, an assisted living facility, or at a nursing home. The costs for such care are staggering. The average annual cost nationally for nursing home care is approximately $66,000 a year. You may think that medical insurance or Medicare will help, but they may not. Most medical insurance policies carry exclusions and limitations on long-term care. The same goes for Medicare coverage. Now if insurance can’t help you, surely your family members can. But what if they don’t have the means? And what about your independence? Most of us do not want to be dependent on our families in such a way. You’ve got to plan ahead and secure yourself and your family with long term care insurance. Most people overcompensate with insurance to protect their homes but neglect additional insurance for their health. Long term care insurance can help protect your assets and preserve an estate for your heirs, help you to provide yourself or your spouse with the best quality medical care, and help you avoid welfare and preserve your independence.
[Read slide.] This is a very common myth. I know a lot of you probably think this. The truth is…
Unfortunately, the probability of a person between the ages of 35 and 65 being unable to work for more than 90 days due to an illness or injury are one in four. It could happen from a variety of circumstances – car and home accidents, environmental hazards, stress-related illnesses, the onset of a physical or mental medical condition. So, you might be saying that you are covered through your company-sponsored group disability insurance right?
Well, that has its limitations. Most group policies only cover workplace-related injuries, and may cap at certain levels and after a certain period of time – generally, only six months. The benefits are based on a percentage of your salary alone — ignoring bonuses and commissions. What about social security? Not much help either. The qualifications are so strict only half of those who apply actually collect a benefit. Most of us focus more on insuring our property and possessions than we do our own person. If you are disabled and have bills to pay and don’t have the coverage you need, you may be forced to dip into your children’s college fund or the money you’ve been saving for your retirement. What’s the answer? A long-term disability policy would replace a portion of your lost income, providing an income stream if you are unable to work. Unlike group disability policies, individual long-term disability insurance will cover nonwork-related illnesses or injuries. It provides more of a monetary benefit for a longer period of time and, if you pay your premiums with after-tax money, your benefit will usually be income tax free.
Our next Myth topic relates to Investment Strategies.
[Read slide.] Does this sound familiar?
The reality is that every investment carries a risk - even if it’s a proven “winner.” So, if you invest in only one industry or one type of investment, you’ll increase your risk factor and not necessarily get high returns. Just consider what happened in the late 90s and all of those people who invested heavily in the technology industry. What is most important to consider is asset allocation. That is, the way you weigh investments in your portfolio among stocks, bonds and money markets. Asset allocation can help you lower your overall investment risk and increase the chances of meeting your investment objectives. The asset allocation that is right for you depends on your investment time frame, goals, and tolerance for risk. Lets take a look to see the risk versus return for certain investments…
[Go over details of chart] Any sound asset allocation strategy begins with diversification, which is investing in several different types of individual funds or securities. So, if the return of one investment is falling, the potential return of another may be rising. In doing so, you help to offset the negative effect a poor performing investment may have on your entire portfolio. Lastly, don’t forget to do periodic reviews.
[Read slide.] This is a classic myth. We’ve all been guilty of practicing this method of investing. However…
The “buy low, sell high” theory of investing is based on the ability to accurately time the market. But with so many variables, how can anyone, even the most experienced financial professionals predict its performance? Its really an educated guessing game and it doesn’t always work. Utilizing “buy low, sell high” you could be missing out on the market’s best-performing cycles. Take a look at the graphic. A $1 investment made in 1987 left untouched would be worth $9.31 in 2006. But missing the best 17 months of 20 years would be worth only $2.32.
So what strategy should you consider? To get potentially greater long-term results on your investments, invest for time, not timing. A consistent portfolio with smart asset allocation should give you better results without the risk of timing the market.
There are many Myths about Retirement Planning; today we are going to talk about a few of the most common ones.
[Read slide.] Here’s one that a lot of people consider when they are getting ready to retire. Just stay conservative right?
Not exactly. Retirement is the beginning of a new life. Today, with the higher standards of living and medical care advances, we are living longer and healthier. Look at the chart. If you are 65 in the year 2004, you can expect to live another 21 years. That’s quite a long time!
If you’ve got 20 more years to enjoy life, your retirement money has to work longer and harder. How do you do that? First, you’ve got to look at your own personal situation. What is your risk tolerance? How is your health? Do you have a history of longevity in your family? What are your investment objectives? Do you have experience and what are your expectations? How much is your net-worth and assets? Where are your funds coming from? Reviewing these things will help you decide on an asset allocation strategy that can potentially reward you with greater returns. Just because you are in retirement doesn’t mean that you must invest conservatively. If you avoid the traditional “in-retirement” conservative investments and make choices based upon the things we’ve talked about you may be able to enjoy your retirement the way you want to, and at the same time, enhance the estate you plan to leave for your loved ones.
[Read slide.] This is a very widely thought theory about 401(k)s.
A 401(k) plan is one of the smartest ways to save for retirement, but it’s not just a savings account. A 401(k) is an employee-funded retirement savings plan. It offers investment options, it requires strategic planning. So, no matter how large your contributions are, if you aren’t thinking about the allocation, you are probably missing out on the opportunity to help your 401(k) earn the most money it can. How can you change this? Well, first you must choose your investments wisely. 401(k) plans offer different fund options in which to invest your contributions. These may include stocks, bonds or money market investments, ranging from lower-risk to higher-risk options. This flexibility of choices allows you to create a portfolio that is balanced between your long-term financial objectives and your tolerance for risk — which ultimately maximizes the potential of your retirement savings. Now if funds are not invested aggressively enough, there may be a shortfall. On the other hand, if invested too aggressively, your retirement nest egg could be in jeopardy of a market downturn or adverse event. Finally, its important to monitor the progress of your 401(k) and make adjustments as your circumstances change. Ultimately, the timing and size of your contributions, as well as the allocation strategy you choose, make your 401(k) retirement savings plan most effective.
[Read slide.] For you small business owners out there, you may believe this to be true.
Relying on your business to ensure your personal financial security is risky. Your business may be a “success” now, but what will happen when you retire? Maybe you plan to sell it to fund your retirement. Do you know how much its really worth? Could you be overestimating its worth? Protect both your business and personal finances with strategic planning. Keep separation between the two. Having a personal financial strategy, outside of your business finances, will help to ensure that your business will continue to run smoothly if your personal finances change and vice versa. Also, you can see how your business stands on its own, giving you a realistic view of what its worth. Having a business continuation plan will protect you and your family whether you are retiring or if something should happen to you. Finally, there are numerous financial vehicles designed for small business owners that you should take advantage of. [We can go into more detail at our one on one consultation].
[Read slide.] Have any of you thought about the order in which assets are disposed? [Ask for a show of hands].
There’s more to retirement than just liquidating your savings and investments. You have to think about the order in which you do it. Not thinking about the timing or sequencing, could make you susceptible to additional taxes and penalties. For example, most qualified plans, like pensions, 401(k)s and annuities impose strict penalties on early withdrawals. Consider how long your retirement will last. With people living longer and better, your retirement could last 20 years or more. Would you have enough funds to ensure that you continue to live the retirement lifestyle you want for however long it lasts? Smart planning will prepare you for the duration of your retirement. Well before retirement, you’ll want to create a retirement planning strategy that identifies the goals which are most important to you, determine the appropriate time horizons in which to achieve these goals, and help you select the best products to achieve your objectives. At retirement, the key is to look at both your short- and long-term needs and decide which of your assets would best serve you by immediate or future liquidation, as different investment vehicles accumulate money in different time frames. You’ll want to consider the tax consequences and penalties, as well as potential for future growth. And even when you are in retirement, periodic reviews are still important to ensure that your assets and investments are continuing to meet your financial objective of a comfortable and secure retirement.
Finally, there are some Myths related to General Planning needs, such as…
[Read slide.] A lot of people think that an Education IRA is the answer.
The Education IRA, now known as the Coverdell Education Savings Account, limits you to an annual contribution of $2,000. If you didn’t start saving when your child was born, you may not have enough to pay for their college education. Just look the costs at some of the country’s better-known universities. [Go over details of chart if desired]. There are ways to help you save for these costs – even for late starters. One of them is a 529 Plan. It’s a state-sponsored plan that allows your savings to grow tax-deferred and withdrawals for qualified higher education expenses are tax free. Here’s how it works: Even though these plans are state-sponsored, you do not need to be a resident of the state to participate, but you may lose out on state tax benefits by participating in an out-of-state plan. You can contribute up to $12,000 a year or make a lump-sum contribution of $60,000 every five years. You can carry the gift forward under your annual gift tax exclusion. Remaining account balances can be transferred to another family member of the original beneficiary. Withdrawals for qualified higher education expenses are tax free. 529 Plans also offer the advantage of professional asset management, so by comparing various state plans, you’ll be able to choose from several professional management companies.
[Read slide.] Sounds completely logical right?
But, no one says that you have to make only one mortgage payment once a month. Instead, using this example, if you make 13 or more payments a year, you will save money in mortgage interest and own your home free and clear – much sooner than expected. Take a look at the graphic. [Go over details of graphic]
Most importantly, you may be able to free up more of your money for your other important needs, like retirement.
[Read slide.] We’ve all given money to charities right? But how do you know this is the most beneficial way to give a gift?
If you give cash to a charity, you are missing an opportunity to save on income taxes as well as not giving as much as you can to the charity. Why? Because there is another way to gift that will actually increase the gift to charity. By giving a capital asset which has appreciated in value, you may be able to deduct the full fair market value of the asset as a charitable gift without paying income tax on the appreciation. Also, the charity will acquire the full value of your contribution because it will not be subject to capital gains tax when it sells the asset. Your charity can cash in the stock for its market value or choose to invest it to make more money. Let’s see how it works…
[Go over details of graphic]
[Go over details of graphic]
Now that we’ve gone over some of the common planning myths and hopefully motivated you enough to take action, take a look at the back of the brochure/ workbook at the Planning Checklist. We’ve compiled some thought provoking questions that will help you determine if you need to implement some of the strategies we’ve talked about today. It’s a great way to help you quickly assess your needs.
In summary, you can make the best decisions if they are armed with the truth about planning. Just by being here you’ve armed yourself with some new information. Continue to get as much information as you can, educate yourself and get the right information. Most importantly, plan ahead. The future financial security of you and your family depends on the decisions you make now.
What do you do with the new information you’ve learned today? You can make it a point to devote yourself to making your own decisions about your finances. But you may not know all of the products and strategies to implement your decisions. That’s where we come in. Our aim is to empower you to make informed decisions toward meeting your specific goals. We help you identify and prioritize your financial aspirations, and offer guidance specific to you. [or if we can refer you to a qualified financial professional - if the presenter is not a financial professional ]. You choose the strategies that work best for you and we’ll help you implement them. We know that planning is more than talk, its about you and your family, your dreams and aspirations.
Finally, I (we) have two favors to ask of you. The first favor is that you complete an evaluation form found in the workbook both honestly and candidly so that we might improve our workshop for others. The second favor is that you sign up for an initial consultation with us. I’ll explain more about this after the presentation, but we provide a no cost, no obligation consultation for you to determine if we can be of service to you on an individual basis. We find that about 3/4ths of those who attend our briefings do sign up for an initial consultation. We are interested in forming working relationships with many of you and many of these who come in do become clients. Thank you and we look forward to working with you.
Please be advised that this document is not intended as legal or tax advice. Accordingly, any tax information provided in this document is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer. The tax information was written to support the promotion or marketing of the transaction(s) addressed and you should seek advice based on your particular circumstances from an independent tax advisor. Life insurance and annuity products are issued by AXA Equitable Life Insurance Company (NY, NY). Variable products are co-distributed by AXA Advisors, LLC and AXA Distributors, LLC. AXA Equitable, AXA Advisors, and AXA Distributors are affiliated companies and do not provide legal or tax advice.
Today’s Workshop Objectives <ul><li>Dispel 15 common planning misconceptions </li></ul><ul><ul><li>Estate Planning </li></ul></ul><ul><ul><li>Insurance Strategies </li></ul></ul><ul><ul><li>Investment Strategies </li></ul></ul><ul><ul><li>Retirement Planning </li></ul></ul><ul><ul><li>General Planning </li></ul></ul><ul><li>Learn the truth about your planning options </li></ul><ul><li>Get information on what you can do to better enhance and protect your assets </li></ul>
Your Workbook <ul><li>Education-oriented material </li></ul><ul><li>Space for taking notes and listing “to do’s” </li></ul><ul><li>“Planning Checklist” helps you assess your needs </li></ul><ul><li>Valuable resource; bring to one-on-one meeting with your financial professional </li></ul>
<ul><li>Estate Planning </li></ul>GE-41640 (10/07) Preserve more of your hard earned assets
Myth #1 <ul><li>Estate plans are only for wealthy people. </li></ul>
<ul><li>Realize your worth – create a plan </li></ul><ul><li>Preserve more of what you've earned for those you care about </li></ul>Truth… = An estate worthy of planning and protection Cash Real Estate Employee benefits Investments Life insurance Pension Profit sharing IRA 401(k) = An estate worthy of planning and protection
<ul><li>My will ensures that my estate will be distributed exactly as I wish. </li></ul>Myth #2
<ul><li>Simply drafting a will may not be enough </li></ul><ul><li>An invalid or incomplete will could leave your estate in probate for years </li></ul><ul><li>Supplement your will with estate planning strategies: </li></ul>Truth… <ul><ul><li>Use life insurance in an irrevocable trust </li></ul></ul><ul><ul><li>Assets are permanently removed from your estate and not subject to current estate taxes </li></ul></ul>
<ul><li>I don’t need to worry about estate planning since everything is going to my spouse when I die. </li></ul>Myth #3
<ul><li>Leaving everything to your spouse could cost your heirs large amounts in estate taxes </li></ul><ul><li>Utilize the Unified Tax Credit. </li></ul><ul><ul><li>Under the Economic Growth and Tax Relief Reconciliation Act of 2001, numerous changes to the federal estate and gift taxes are scheduled to take effect between 2002 and 2010. These include repeal of the estate tax for the year 2010 although gift taxes on lifetime transfers would continue in effect. 2001 estate and gift tax law would be reinstated for year 2011 and thereafter. Therefore, the Act provides several years of lower rates and higher exemptions followed by one year of repeal for 2010. </li></ul></ul>Truth…
Truth… Total Estate $5,000,000 Surviving Spouse $5,000,000 Federal Estate Tax $1,635,000 Net to Heirs $3,365,000 Net to heirs without using the Unified Credit Net to heirs with Unified Credit Planning Total Estate $5,000,000 Surviving Spouse $3,500,000 Federal Estate Tax $450,000 Net to Heirs $4,550,000 By-Pass Trust $2,000,000 $900,000 Federal Tax Savings
<ul><li>Insurance Strategies </li></ul>GE-41640 (10/07) Protecting yourself and your loved ones
<ul><li>I have life insurance through my job. I don’t need any more. </li></ul>Myth #4
<ul><li>Group life insurance offers minimal and restrictive coverage </li></ul><ul><li>Secure your family’s future with life insurance that offers more: </li></ul><ul><ul><li>Many life insurance policies provide you with the customized coverage your family needs </li></ul></ul><ul><ul><li>Unlike group term insurance, it can also serve as a versatile tool to address other needs </li></ul></ul>Truth…
<ul><li>My medical insurance will cover any unexpected illnesses that come my way. </li></ul>Myth #5
<ul><li>1 in 2 people will require long-term care 1 </li></ul><ul><li>Average annual cost for nursing home care is almost $66,000 2 </li></ul><ul><li>Medical insurance, Medicare won’t cover costs </li></ul><ul><li>Long-term care insurance: </li></ul><ul><ul><li>Protect your assets </li></ul></ul><ul><ul><li>Preserve an estate for heirs </li></ul></ul><ul><ul><li>Quality medical care </li></ul></ul><ul><ul><li>Preserve your independence </li></ul></ul>Truth… 1 www.ltcweb.org, 2007 statistics. 2 Congressional Budget Office. Financing Long-Term Care for the Elderly , April 2005.
<ul><li>My company’s group disability insurance is all I need. Besides, I doubt I will ever become disabled. </li></ul>Myth #6
<ul><li>1 in 4 people between 35-65 will be unable to work for more than 90 days due to an illness or injury. 1 </li></ul>Truth… Source: Field Guide to Estate Planning, Business Planning & Employee Benefits, National Underwriter, 2007. 1 Society of Actuaries, 2002.
<ul><li>Group disability coverage is limited </li></ul><ul><li>Social security qualifications are strict </li></ul><ul><li>Individual long-term disability insurance: </li></ul><ul><ul><li>Protect your assets, retirement savings and child’s college fund </li></ul></ul>Truth…
<ul><li>My portfolio will grow if I invest in proven “winners.” </li></ul>Myth #7
<ul><li>Every investment carries a risk </li></ul><ul><li>Think – technology industry in the late 90s </li></ul><ul><li>Diversification is the key to asset allocation: </li></ul><ul><ul><li>Lower your overall investment risk </li></ul></ul><ul><ul><li>Increase chances of meeting investment objectives </li></ul></ul><ul><ul><li>Consider time frame, goals and risk tolerance </li></ul></ul>Truth…
<ul><li>Allow your invested money to make money: </li></ul><ul><ul><li>Invest for time </li></ul></ul><ul><ul><li>Smart asset allocation </li></ul></ul><ul><ul><li>Regular portfolio reviews </li></ul></ul>Truth…
<ul><li>Retirement Planning </li></ul>GE-41640 (10/07) Living the retirement of your dreams
<ul><li>I’m about to retire. I need to move all my investments into CDs and bonds. </li></ul>Myth #9
<ul><li>We are living longer and healthier than ever </li></ul>Truth… Source: Individual Retirement Arrangements (IRAs), Publication 590, Appendix C, Internal Revenue Service, 2004. Age in 2004 Average Remaining Life Expectancy 20 63.0 30 53.3 35 48.5 40 43.6 45 38.8 50 34.2 29.6 25.2 21.0 17.0 13.4 80 10.2 7.6 90 5.5 4.1 55 60 65 70 75 85 95
<ul><ul><li>Your risk tolerance </li></ul></ul><ul><ul><li>Your health </li></ul></ul><ul><ul><li>Your life expectancy </li></ul></ul><ul><ul><li>Your investment objectives </li></ul></ul><ul><ul><li>Your experience & expectations </li></ul></ul><ul><ul><li>Your networth & assets </li></ul></ul><ul><ul><li>Your source of funds </li></ul></ul>Truth… <ul><li>Your money has to work longer and go further </li></ul><ul><li>Review your portfolio, make choices based on: </li></ul><ul><li>You may be able to avoid traditional “in-retirement” conservative investments and enhance your estate </li></ul>
<ul><li>I “max out” the contributions to my 401(k) so I’m all set for retirement. </li></ul>Myth #10
<ul><li>A 401(k) is much more than a savings account </li></ul><ul><ul><li>Offers investment options </li></ul></ul><ul><ul><li>Requires strategic planning </li></ul></ul><ul><li>Maximize your retirement funds – choose investments wisely </li></ul><ul><li>Consider the allocation of your contributions </li></ul>Truth…
<ul><li>I don’t need a retirement plan because my successful business will fund all of my retirement needs. </li></ul>Myth #11
<ul><li>Relying on your business to ensure your personal financial security is risky </li></ul><ul><ul><li>Will your business still be a success after you retire? </li></ul></ul><ul><ul><li>Are you overestimating its worth? </li></ul></ul><ul><li>Strategic planning protects both your business and personal finances </li></ul><ul><ul><li>Maintain separation </li></ul></ul><ul><ul><li>Implement a business continuation plan </li></ul></ul><ul><ul><li>Take advantage of financial vehicles available to you </li></ul></ul>Truth… Business Personal
<ul><li>When I retire, I’ll just sell all my assets and collect the money. The order in which I do it doesn’t matter. </li></ul>Myth #12
<ul><li>Timing and sequencing are important to avoid additional taxes and penalties </li></ul><ul><ul><li>Ex: Most pensions, 401(k)s and annuities impose strict penalties on early withdrawals </li></ul></ul><ul><li>Create a planning strategy for retirement </li></ul><ul><li>At retirement </li></ul><ul><ul><li>A 20 year retirement? </li></ul></ul><ul><ul><li>Evaluate short and long-term needs </li></ul></ul><ul><ul><li>Identify assets for liquidation </li></ul></ul><ul><ul><li>Periodic reviews </li></ul></ul>Truth…
<ul><li>General Planning </li></ul>GE-41640 (10/07) Preparing for the future
<ul><li>I can easily pay for my child’s college tuition because I started an Education IRA. </li></ul>Myth #13
Truth… <ul><li>With a $2,000 annual limit, it may not be enough </li></ul><ul><li>529 Plans are designed to help families save for future college costs and reap special tax benefits 4 </li></ul>1. Tuition, fees and room and board. Does not include books and personal expenses. Individual college information provided by collegeboard.com. Costs, dates, policies and programs are subject to change. 2. For in state-students. 3. Assuming 6% annual inflation rate in each of the four years of college. 4. If you are investing in a 529 plan outside your state of residence, you may lose available state tax benefits. Make sure you understand your state tax laws to get the most from your plan. 529 plans are subject to enrollment, maintenance, administration/management fees and expenses. 529 plans are subject to fluctuation in value and market rise, including loss of principal. Investors should consider the investment objectives, risks, charges, and expenses of 529 plans carefully before purchasing. More information about 529 plans can be found in the issuer’s official statement. Please read the official statement carefully before investing. SAMPLING OF COLLEGES 2007 EXPENSES 1,2 4-YEAR TOTAL 3 Harvard University $45,620 $199,570 Duke University $45,452 $198,833 University of Notre Dame $44,477 $194,567 Wake Forest University $43,830 $191,535 Rice University $39,150 $171,264 University of California-Berkeley $19,728 $86,298 Howard University $20,996 $91,846 University of Maryland $16,823 $73,591 University of Florida $9,796 $42,852
<ul><li>A 30-year mortgage will take 30 years to pay off. </li></ul>Myth #14
<ul><li>Not if you make 13 payments a year </li></ul>Truth… This example is a hypothetical intended for illustrative purposes only. THE EFFECT OF ONE EXTRA PAYMENT PER YEAR 13 payments a year 12 payments a year End of Mortgage Period: 24 Years Beginning of mortgage, June 2004. Assuming a mortgage of $250,000 at an interest rate of 6%. Still owe $85,156 End of Mortgage Period: 30 Years Oct. 2028 May 2034
<ul><li>Save in the short and long-term </li></ul><ul><ul><li>Save in taxes and mortgage interest </li></ul></ul><ul><ul><li>Own home sooner </li></ul></ul><ul><ul><li>Free up more money </li></ul></ul>Truth…
<ul><li>The best gift I can give to charity is money. </li></ul>Myth #15
<ul><li>By giving cash to a charity, you are missing a chance to save on income taxes and give more money to the charity </li></ul><ul><li>Give an appreciated capital asset instead </li></ul>Truth… <ul><ul><li>Deduct the value as a charitable gift without paying income tax on the appreciation </li></ul></ul><ul><ul><li>Charity will acquire the full value of the contribution </li></ul></ul><ul><ul><li>Charity can cash in stock for market value or invest it to make more money </li></ul></ul>
Truth… Cash or Cash Equivalents (Cash, T-bills, CDs) You gift cash You receive a $1,000 tax deduction Charitable organization receives $1,000
Truth… Appreciable Assets (Stocks, Bonds, Mutual Funds Shares, Other Securities) You gift shares Charitable organization receives $1,500 in mutual funds (Can sell or reinvest) Not subject to capital gains tax Shares appreciate to full market value of $1,500 You purchase $1,000 worth of an investment Typically, you get a $1,500 tax deduction (without paying income tax on the $500 appreciation) Assumes maximum annual limit on income tax deduction allowable for charitable contributions is not yet met.
<ul><li>Do you.. </li></ul><ul><ul><li>have a will? </li></ul></ul><ul><ul><li>balance the investment of your 401(k)? </li></ul></ul><ul><ul><li>have a 529 Plan for your child? </li></ul></ul><ul><ul><li>have a marital trust? </li></ul></ul><ul><ul><li>have long-term care insurance? </li></ul></ul><ul><ul><li>gift appreciated assets to a charity instead of cash? </li></ul></ul><ul><li>Complete the Planning Checklist – it will help you determine if you are missing opportunities to help you better control your finances </li></ul>Planning Checklist
<ul><li>The truth – the most important tool you need in planning for your financial future </li></ul><ul><li>The right information can help you make smart decisions </li></ul><ul><li>Plan ahead </li></ul>Summary
<ul><li>Do it yourself </li></ul><ul><li>Work with others </li></ul><ul><li>Work with us </li></ul><ul><li>Don’t procrastinate; timing is important </li></ul>Where do you want to go from here?
<ul><li>Please complete evaluation form and hand it in before you leave </li></ul><ul><li>Schedule time to meet for a personal consultation </li></ul>Workshop Evaluation
Thank you <ul><li>Investments are: </li></ul><ul><li>Not a Deposit </li></ul><ul><li>Not FDIC Insured </li></ul><ul><li>Not Insured by Any Federal Government Agency </li></ul><ul><li>Not Guaranteed by the Bank (or Savings Association) </li></ul><ul><li>May Go Down in Value </li></ul>