HIDDEN DESCRIPTION SLIDE — NOT TO BE SHOWN TO THE PUBLIC Financial Facts Catalogue code: B07 Full...
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Transcript of HIDDEN DESCRIPTION SLIDE — NOT TO BE SHOWN TO THE PUBLIC Financial Facts Catalogue code: B07 Full...
HIDDEN DESCRIPTION SLIDE — NOT TO BE SHOWN TO THE PUBLIC
Financial FactsCatalogue code: B07
Full presentation or module? Presentation
Slide numbers: B07-1 to B07-28
Registered/Non-Registered Usage: Okay for use by all. Not reviewed by FINRA due to no mention of GS Funds or Retail products. (Choices: registered rep use only, not for registered rep use, allowed for all, partial limitations)
Last update info:Date updated: 2014-12-31Project #25321Description of changes: updated slides B07-18, B07-23.
update background with new approved template
Filed with FINRA? No If yes, date:
Notes:
Financial Facts Basic Concepts You Need to Know
B07-1
You won’t work forever.
FINANCIAL FACTS
Financial planners suggest you will need to replace 70–90% of your annual income when you retire.
On average, Social Security was designed to only replace 25–40% of your income.
You may live one-third of your life in retirement.
1Fact
B07-2
Source: CIA — the World Fact BookB07-3
Longer Lifespan
1946 — age 672014 — age 78
11 years longer
The earlier you save, the better.
FINANCIAL FACTS
Compound return — the return on your original investment, plus the return on your previous earnings — can make a huge difference in your retirement account balance over time.
2Fact
B07-4
Compound Return
Original investment:$100
Invested for one year withan 8% return adding $8 fora total of: $108
Invested for another yearwith an 8% return addingaround $9 for a total of:$117
B07-5
FINANCIAL FACTS
Retirement Plan Contributions
Invest $100 per month beginning at age:
When you retire at age 65,
you have:*
25 $349,101
30 $229,338
35 $149,012
40 $95,103
45 $58,896
50 $34,604
55 $18,295
60 $7,348
B07-6
*Accounts in this column are based on an 8% annual investment return in a tax-deferred retirement plan. Your return may be more or less. Note that the funds will be subject to income tax when you receive your distribution(s).
FINANCIAL FACTS
To Accumulate $100,000 by Age 65
FINANCIAL FACTS
Age 50
Monthly contribution $290
Total contributions $52,200
Total return $47,800
Total accumulation $100,000
B07-7
Based on 8% annual earnings.This is an illustration to show the concept of compound return and is not intended to imply the past or future performance.
To Accumulate $100,000 by Age 65
FINANCIAL FACTS
Age 50 Age 40
Monthly contribution $290 $105
Total contributions $52,200 $31,500
Total return $47,800 $68,500
Total accumulation $100,000 $100,000
B07-8
Based on 8% annual earnings.This is an illustration to show the concept of compound return and is not intended to imply the past or future performance.
To Accumulate $100,000 by Age 65
FINANCIAL FACTS
Age 50 Age 40 Age 30
Monthly contribution $290 $105 $44
Total contributions $52,200 $31,500 $18,480
Total return $47,800 $68,500 $81,520
Total accumulation $100,000 $100,000 $100,000
B07-9
Based on 8% annual earnings.This is an illustration to show the concept of compound return and is not intended to imply the past or future performance.
Yes, you have money to invest.
FINANCIAL FACTS
Monitor your spending for one month. Determine where your money is going
and where you can economize. Start with 1% and increase it 1% each
time you get a raise.
3Fact
B07-10
Finding Extra Money Lower your tax
withholding through your employer.
Check fees and interest rates on all credit cards (these can be negotiated).
Consider consolidating credit card debt to a low- interest loan.
Average your utility bills.
B07-11
FINANCIAL FACTS
Utilize all “pre-tax” programs offered by your employer.
Watch ATM and checking account fees.
Raise deductibles on insurance.
Consider refinancingyour home or car if market interest rates are 1½% lower than what you are paying.
A percentage is better than a “fixed dollar” amount.
Monthly salary = $2,000 $100 monthly “fixed” investment (5%)Five years later with 3% annual raises:Monthly salary = $2,318$100 monthly “fixed” investment (4.3%)
4Fact
B07-12
FINANCIAL FACTS
A “Fixed Dollar” Contribution
Remains flat when your salary increases
Does not keep pace with inflation
Makes it impossible to maintain your standard of living when you retire
B07-13
FINANCIAL FACTS
Your investment choice is important.
FINANCIAL FACTS
“Owned” investment Shares of American and
international companies Volatile returns with
increased risk Historically, equities
have a higher potential for long-term return
Fixed Income Assets (Bonds)
Equity Assets (Stocks)
5Fact
B07-14
“Loaned” investment Bonds, money market
instruments, Treasury notes, etc.
Less volatile returns with reduced risk
Historically, fixed-income assets have less potential risk and lower potential returns than equity assets
Which type of investment is right for you?
FINANCIAL FACTS
Time horizon Risk tolerance Diversification
B07-15
Series172%
28%
Series190%
10%
Series193%
7%
Stock Performance from 1930–2010
FINANCIAL FACTS
Percentage of time stocks had positive returns, 1930–2010
1 Year Periods 5 Year Periods 10 Year Periods 20 Year Periods
B07-16
Positive Returns Negative Returns
Source: Ibbotson AssociatesWhile past performance is no guarantee of future performance, the market itself has been resilient through the years.Illustration based on S&P 500 Index from 1/1/1930 to 12/31/2010.
100%
Asset Allocation matters.
FINANCIAL FACTS
Return on investment — the rate at which your investment grows as a result of earnings.
Higher return usually means greater risk. A small difference in a rate of return can
make a big difference in the size of your investment over time.
6Fact
B07-17
A little risk can be a good thing.
FINANCIAL FACTS
Invests $250/month 8% average return
for 35 years Investment total:
$574,000
This hypothetical illustration is not intended to represent or predict the return on an actual investment.
Conservative Portfolio Aggressive Portfolio
B07-18
Invests $250/month 6% average return
for 35 years Investment total:
$356,000
Free money is a big deal.
FINANCIAL FACTS
If matching contributions are offered, you should always try to take advantage of them.
7Fact
B07-19
Debt can derail your plan.
FINANCIAL FACTS
Paying off debt Checking your credit record
8Fact
B07-20
Dealing with Debt
FINANCIAL FACTS
Avoid the minimum payment trap
Assumes $5,000 debt, 16% interest, no additional chargesSource: Bankrate.com
Monthly Payment Total Paid Years to Pay
Off
Minimum $7,431 12
$200 fixed $6,123 2.6
$225 fixed $5,970 2.25
$250 fixed $5,854 2
B07-21
Using Debt Wisely
FINANCIAL FACTS
B07-22
Importance of your credit history
Obtaining your credit report• www.annualcreditreport.co
m• Call 1-877-322-8228
Correcting mistakes in your credit report
You can’t time the market.
FINANCIAL FACTS
Market timing — trying to move out of an investment when you think it is about to lose value or move into an investment just as you think it is about to grow in value.
9Fact
B07-23
Missing the Best Days in the Market — 1990–2010
FINANCIAL FACTS
B07-24
Market Returns: S&P 500 Index from 1990–2010
Sources: FactSet, Standard & Poor’s as of 12/31/2010
Stayed fully invested all 5,295 days
Missed 10 best days
Missed 20best days
0% 2% 4% 6% 8% 10%
8.97%
5.25%
2.82%
0.76%Missed 30 best days
You’re in it for the long haul.
FINANCIAL FACTS
Dollar cost averaging — Investing the same amount of money at regular intervals over a long period of time resulting in a lower average cost per share.
10Fact
B07-25
Be a long-term investor.
FINANCIAL FACTS
Be aware of the ups and downs
Remember your objectives
B07-26
Stuff to Do
FINANCIAL FACTS
Figure out where you can find more money in your budget
Invest a percentage of your income• Join the 1% Club
Check your portfolio allocation• Consider GuideStone’s three
approaches to investing Deal with your debt Use GPS: Guided Planning Services®
*
Financial advice provided by GuideStone Advisors, a controlled-affiliate of GuideStone Financial Resources.
B07-27
B07-28