The longer you have for saving up, the less money you need to allocate each month toward your goal. www.lifethenfinance.com 3. The Power of Compound Interest • if you begin saving $100 a month at age 21 and earned 8 percent interest, by 65 your account would be worth about $447,000. www.lifethenfinance.com 4. The Power of Compound Interest: Cont.... • Increasing the monthly contribution to $200 would double that to about $893,000 www.lifethenfinance.com 5. • Because of the power of compound interest, it’s to your advantage to start your long term savings as early as possible!

1. Long Term Savings
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2. The longer you have for
saving up, the less money
you need to allocate each
month toward your goal.
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3. The Power of Compound Interest
• if you begin saving $100 a month at age
21 and earned 8 percent interest, by 65
your account would be worth about
$447,000.
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4. The Power of Compound Interest:
Cont....
• Increasing the monthly contribution to
$200 would double that to about $893,000
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5. • Because of the power of compound
interest, it’s to your advantage to start
your long term savings as early as
possible!
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6. Saving for College – Strategies
• Start early – Begin an account for your child in
their first year.
• Assemble a team – Try to get relatives involved.
They can give college money as gifts for
Christmas or birthdays.
Tip: Let your child pitch in as
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well.

7. Saving for College - Strategies
• Seek security plus a higher interest rate.
• Online banks tend to have higher interest rates.
• Look into using mutual funds and other
investments.
Warning: As the interest rate
rises, so does the risk!
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8. Scholarships
• Offered on an academic or athletic basis
• Some cover the entire tuition but most only cover a
portion of the bill.
• You don’t have to pay them back!
Tip: Take advantage of your
college’s financial aid office!
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9. Saving for Retirement
Consider investment options that
provide a better rate of return on
your funds than your checking or
savings account at your bank.
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10. www.lifethenfinance.com
IRA’s
• Retirement accounts you can open at your bank
• They allow you to create a portfolio of stocks,
bonds, and mutual funds
• Two types: Traditional and Roth IRA’s

11. Traditional IRA’s
• You can fund your IRA with cash or cash
equivalents.
• You pay no income tax on the money you deposit
into your IRA.
Warning: Taking money out of an IRA
before you hit age 70 will incur
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penalties.

12. www.lifethenfinance.com
Roth IRA’s
• Not tax deductible
• Fewer penalties for taking money out
• Deposit limit: $5,000 per year($6,000 if you’re
over age 50)

13. www.lifethenfinance.com
Roth IRA’s
• If you have a Roth and Traditional IRA, the
deposit limit applies to both accounts
combined.
o The limit is still $5000 or $6,000. It doesn’t double
just because you have two accounts.

14. www.lifethenfinance.com
401(K)
• Processed through your employer
• Annual deposit limit: $16,500
• Any contributions will not be taxed until you
withdraw the money

15. www.lifethenfinance.com
401(K)
• Earnings made from the 401(k) are tax deferred
until the money is withdrawn.
• Withdrawing money before you reach the
minimum age (60) will result in penalties.
• Some employers match a percentage of your
contribution

16. Retirement Funding in Canada
• Tax Free Savings Account
• You can withdraw money at any time without tax
penalties.
Tip: While the deposits aren’t tax
deductible, money made from that
account isn’t taxed.
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17. Retirement Funding in Canada
• Registered Retirement Savings Plan
• Much closer to USA’s Traditional IRA
• The deposit limit is much higher than IRA’s in
the USA
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18. Retirement Funding in Canada
Your Registered Retirement Savings Plan
doubles as a 401(k), as employers can put
money from your paycheck straight into the
account.
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19. IRA’s in the United Kingdom
• Individual Savings Account (ISA)
• Divided into two components – Cash and Stock
shares.
• It's possible to transfer funds from the cash to the
stocks component, but not the other way around.
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20. Other Countries
• The term 401(K) does not mean much in other
countries, since it refers to a US law.
• However, other countries have similarly functioning
accounts.
• The term has become common enough that these
accounts are sometimes referred to as 401(k)’s.
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21. Self-Reflection Questions:
• What financial goal is needed to retire
comfortably?
• Does my employer match 401(k) contributions?
• What type of retirement savings account best
suits my needs?
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22. www.lifethenfinance.com
Action Tips:
• Start saving now to allow earnings to compound and
accumulate to a greater extent.
• If your employer matches 401(k) contributions, add the
maximum percentage that your employer will match to
ensure you get as much of a return as possible.
• If you put money into an IRA or 401(k), leave it there;
taking it out results in penalties and fees.