Saving Success Part 2
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The document outlines strategies for saving over $100,000 in 15 years, emphasizing budgeting, investing, managing debt, minimizing taxes, and protecting wealth. It highlights the importance of compound interest and advises on investment types, debt management, and tax considerations to maximize financial growth. The document encourages disciplined financial planning and consistent investment to achieve financial goals.
Saving Success Part 2
- 1. Save Over $100,000 in 15 Years or Less SAVING SUCCESS PART 2
- 2. Strategies: How to Achieve Your $100,000 Goal Budgeting & Saving (See Part 1) Investing Managing Debt Minimizing the Effect of Taxes Protecting Your Wealth and Assets http://eternalspiralbooks.com/save 2 We will discuss each of these in turn in this series of presentations. Let’s look at investing. Saving Success
- 3. Investing http://eternalspiralbooks.com/save 3 Investing may sound really complicated, but it is a fairly simple principle. Put your money to work for you earning interest, which can then ‘compound’ over time. Invest and get a 10% annualized rate of return, and you will have $110 at the end of the year. It will be worth $121 at the end of another year. Past performance is not a guarantee of future success, but taking just a few minutes each day to learn more about investments that can help your money make more money for you and your family can yield big results. Saving Success
- 4. Tips for Investing Investing is putting your money to work for you; it is thinking about the best way to use your money to make more money. The more money you use invest in your lifetime on (safe) income-producing assets, the wealthier you will ultimately become. The sooner you get started, the harder your money can work for you, and the longer. A dollar saved at 30 years old earns more than one saved at 50 as you plan to retire. http://eternalspiralbooks.com/save 4 Saving Success
- 5. Things to Consider when Investing Compound Interest • Re-invest interest earned for better financial results. • Start early and consistently re-invest to guarantee larger returns. • At least $46,000 of your $100,000 will be interest if you invest wisely. Risk Tolerance • Tolerate levels of investment risk based on age, financial position and personal circumstances. • Be more conservative with risks if you’re working with a short time frame (Eg, 2 years before college/retirement) http://eternalpiralbooks.com/save 5 Saving Success
- 6. Things to Consider When Investing Personality • Consider if you have the nerve to take financial risks. What is YOUR money mindset. Determine if you are willing to do research into higher risk- taking options. • Determine if you are willing to do research into higher risk- taking options. • Investments that leave you sleepless at night are likely too risky. http://eternalspiralbooks.com/save 6 Saving Success
- 7. Types of Investments Bonds • Lending money to a government or company • Fixed-income: you know the interest earnings up front • Usually low risk, but low returns (but better than nothing!) Stocks • Give you part ownership in business • No steady flow of income • Share prices fluctuate. • The recent stock market downturn of 2008 wiped 44% off share values. But now the market has gone up again! http://eternalspiralbooks.com/save 7 Saving Success
- 8. Types of Investments Mutual Funds • Stocks and/or bonds chosen by a professional money manager • Established with a specific investing strategy in mind, eg, conservative, aggressive Alternative Investment • Includes Options, Futures, FOREX, Gold & Real Estate • More complex and/or have a higher level of risk http://eternalspiralbooks.com/save 8 Saving Success
- 9. Managing Debt http://eternalspiralbooks.com/save 9 There is no point in putting money in the bank or a Money Market account or bonds for 1% to 5% return if you are paying 29% APR on any credit card balances you might have. Make it a priority to pay those down FIRST, and put some money aside for your Emergency Fund. THEN start to think about diverting some of your monthly savings to investments. Saving Success
- 10. Things to Know About Managing Debt If the interest on your debt is greater than the likely rate of return on your investment, then you should be paying your debt first. Most experts quote a figure around 7.5% as a reasonable expectation for return on a stock. Any debt that is charging you more than 7.5% interest should be paid before any real investing starts. Debt is the equivalent of an anti-investment, so get out of it, and stay out of personal debt. (Business debt is another matter if it is good debt that can go to work for you. http://eternalspiralbooks.com/save 10 Saving Success
- 11. Focus on Credit Card Debt Eliminate any additional use of your credit cards. Don't close the accounts, since it will negatively affect your credit score. Do whatever you have to do to stop using them. This could include cutting them up or locking them away to be held in reserve just in case of any dire emergency. http://eternalspiralbooks.com/save 11 Saving Success
- 12. 2 Strategies to Clear Credit Card Debt Start with highest interest card Put most money on this one Pay minimum on others Move on to card #2 next Start with smallest balance card Eliminate number of cards faster BUT May not make best financial sense depending on interest rate http://eternalspiralbooks.com/save 12 Saving Success
- 13. Minimizing the Effect of Taxes http://eternalspiralbooks.com/save 13 It isn’t how much you EARN so much as how much you are able to keep. The taxes you pay, and when you pay them, can be part of your overall strategy to get ahead financially. First there are personal taxes. Then there are business taxes if you own your own business. There are also issues with respect to being self-employed or setting up a corporation. Setting up an LLC, C Corp or S Corp can have major tax implications. An individual is permitted about 75 deductions on their taxes. An LLC can get about 150, an S Corp can get about 350. None of us like to think about taxes, but what you do not know CAN hurt you, or cause you to miss out. Saving Success
- 14. Strategies for Minimizing the Effect of Taxes Make use of tax-deferred accounts. Consider taxes when investing, as there are two tax rates: • Capital gains tax – same for everyone. • Marginal tax rate – depends on income. http://eternalspiralbooks.com/save 14 Saving Success
- 15. Planning Investments Around Taxes Stocks that are held for more than a year and then sold are taxed at the capital gains rate. All bonds and any stocks that are held for less than a year are taxed at your marginal tax rate. That means that if you have one or more accounts that are tax-deferred, you should ideally be holding bonds and short-term stock trades in those accounts. http://eternalspiralbooks.com/save 15 Saving Success
- 16. Protecting Wealth http://eternalspiralbooks.com/save 16 Protect your wealth and assets, and they can help protect you and your family. Cut costs on things that do not generate wealth. Spend on insurance and other forms of protection of your property and assets. Did you know that you can even use certain kinds of insurance policies as an investment vehicle? Spend 30 minutes to an hour each week on your finances. Don’t just balance your checkbook and review all of your expenses and receipts. Also check to see how your investment are doing and spend some time researching investment opportunities. There is no guarantee on the stock market, but some investments are safer than others. Build wealth with each paycheck, rather than spending every dime. Saving Success
- 17. Looking Into Protecting Wealth There are several aspects that go into protecting your assets and your wealth. Set up protection from potential legal actions against you in your business. Open an LLC, for example. Be sure you have adequate insurance and the right kinds of insurance. Avoid the temptation to spend your wealth when compound interest could keep it working for you. http://eternalspiralbooks.com/save 17 Saving Success
- 18. Meeting Your Goals Saving $10 per day is $3650 per year. At the end of 15 years, you might think it would be only $54,750 BUT if you were able to invest at a rate of 10% and allowed the interest to compound, look how much it could turn into in 15 years= $115,969.60!! http://eternalspiralbooks.com/save 18 Year 1 3650 365 Year 2 7665 766.5 Year 3 12081.5 1208.15 Year 4 16939.65 1693.965 Year 5 22283.62 2228.362 Year 6 28161.98 2816.198 Year 7 34628.17 3462.817 Year 8 41740.99 4174.099 Year 9 49565.09 4956.509 Year 10 58171.6 5817.16 Year 11 67638.76 6763.876 Year 12 78052.64 7805.264 Year 13 89507.9 8950.79 Year 14 102108.7 10210.87 Year 15 115969.6 11596.96 Saving Success
- 19. Conclusions 1 Building assets is really just a function of budgeting/saving, investing, reducing debt, and then protecting all your assets. Eliminate the waste from your financial life, increase your income slightly, and invest consistently and you CAN do it! Building savings of over $100,000 in 15 years is well within the capabilities of anyone with the necessary discipline and willingness to learn and put in some effort. http://eternalspiralbooks.com/save 19 Saving Success
- 20. Conclusions 2 Avoid get-rich-quick thinking and plan instead for slow but steady wealth creation. ACTION STEPS: 1. Create a computer file My Goals 2. Set a dollar value for your goal, eg, $100k 3. Set a time limit on your goal, eg, 15 years 4. Put down the date 5. Write all your strategies to help you achieve that goal. 6. Check your progress each month and quarter. If you’re disciplined, you’ll see your money grow. http://eternalspiralbooks.com/save 20
- 21. Save Over $100,000 in 15 Years or Less SAVING SUCCESS PART 2 To learn more, visit: http://EternalSpiralBooks.com/save