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Saving to Build Wealth PowerPoint PPT Presentation

Saving to Build Wealth MoneyWi$e A joint financial education project of Consumer Action and Capital One Topics we will cover: Building an emergency savings fund. Setting personal financial goals. How interest-bearing accounts help your money grow.

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Saving to build wealth l.jpg

Saving to Build Wealth

MoneyWi$e

A joint financial education project of Consumer Action and Capital One


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Topics we will cover:

  • Building an emergency savings fund.

  • Setting personal financial goals.

  • How interest-bearing accounts help your money grow.

  • Balancing the risks and rewards of investing.

  • Accounts that help you save for retirement and education.

MoneyWi$e: Saving to Build Wealth


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Your expectations

  • What do you hope to get out of this seminar?

MoneyWi$e: Saving to Build Wealth


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Getting started

  • Building wealth is like building a brick wall.

MoneyWi$e: Saving to Build Wealth


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Needs and wants

  • Needs are things you use or require every day.

  • Wants are things you would love to have but can live without.

MoneyWi$e: Saving to Build Wealth


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Barriers to saving

  • Credit cards

  • Debt payments

  • Ads for new products such as cars, electronics and clothing.

MoneyWi$e: Saving to Build Wealth


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Emergency savings

  • You can’t build wealth overnight.

  • A good first goal is a savings account for emergencies.

MoneyWi$e: Saving to Build Wealth


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Auto-pilot savings

  • Set up automatic deposits to a savings account.

MoneyWi$e: Saving to Build Wealth


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Easy money

  • Money that is easily available is said to be liquid.

MoneyWi$e: Saving to Build Wealth


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Setting goals

  • Financial goals are personal benchmarks that you set for yourself throughout life.

    • Long term goals

    • Short term goals

MoneyWi$e: Saving to Build Wealth


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Dream Your Goals

  • This activity will help you put an approximate price tag on your financial goals.

MoneyWi$e: Saving to Build Wealth


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Savings accounts

  • Savings accounts are accounts at financial institutions designed to keep your money safe and help it grow.

MoneyWi$e: Saving to Build Wealth


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Interest

  • Your bank pays you when you leave your money on deposit.

  • Annual percentage yield (APY): the amount your money would earn in one year.

MoneyWi$e: Saving to Build Wealth


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Two kinds of interest

  • Simple

  • Compound

MoneyWi$e: Saving to Build Wealth


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Opening an account

  • Shop around for good terms

  • You will need identification (ID)

  • Initial deposit

MoneyWi$e: Saving to Build Wealth


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IDAs

  • Individual development accounts (IDAs) are special sponsored savings accounts for low income families.

  • Most IDAs match what you save.

MoneyWi$e: Saving to Build Wealth


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Next time we will cover.

  • The risks and rewards of investing money

  • Certificates of deposit (CDs)

  • U.S. Treasury investment, such as Savings Bonds

  • Saving for retirement

  • Saving for education

MoneyWi$e: Saving to Build Wealth


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Welcome to Session Two

  • Today we will cover:

    • The risks and rewards of investing money

    • Certificates of deposit (CDs)

    • U.S. Treasury investment, such as Savings Bonds

    • Saving for retirement

    • Saving for education

MoneyWi$e: Saving to Build Wealth


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Risks and rewards

  • As the possibility of profit goes higher, so does the risk that you might lose your money.

MoneyWi$e: Saving to Build Wealth


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Insured accounts

  • Savings accounts and bank CDs that are insured by the FDIC offer a smaller return because they are safer.

  • Stocks, bonds and mutual funds are not insured.

MoneyWi$e: Saving to Build Wealth


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Mutual funds

  • Each investor in a fund shares in the fund’s gains, losses and expenses.

MoneyWi$e: Saving to Build Wealth


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Uninsured investments

  • The fact that you purchase an investment from your bank does not mean that your investment is government-insured.

MoneyWi$e: Saving to Build Wealth


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Stock market risk

  • There is no guarantee that stock prices will go up or that you will make money on stocks.

MoneyWi$e: Saving to Build Wealth


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CD, or Time Deposits

  • Certificates of deposit (CDs) are a safe way to make your money grow.

MoneyWi$e: Saving to Build Wealth


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CDs - Any downside?

  • Your money is off limits until the CD matures.

  • If you cash out a CD before the maturity period ends, you’ll pay a penalty.

MoneyWi$e: Saving to Build Wealth


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Avoid ‘callable’ CDs

  • These are a good deal for the bank and a bad deal for you.

MoneyWi$e: Saving to Build Wealth


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U.S. Treasury Investments

  • Include Savings Bonds and Treasury Bills.

MoneyWi$e: Saving to Build Wealth


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U.S. Savings Bonds

  • Interest can vary, but you are always guaranteed a minimum return.

MoneyWi$e: Saving to Build Wealth


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Treasury Bills

  • T-Bills are sold for less than their face value.

  • Your profit is the difference between the purchase price and the face value.

MoneyWi$e: Saving to Build Wealth


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T-Bill Example

  • Buy a $10,000, 26-week T-bill for $9,750.

  • Hold it for the full 26 weeks.

  • Your profit will be $250.

  • You earned about 2.5% return on your money.

MoneyWi$e: Saving to Build Wealth


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IRAs for retirement savings

  • Individual retirement accounts(IRAs) are savings accounts designed to help people put away money for their retirement.

MoneyWi$e: Saving to Build Wealth


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Tax breaks on IRAs

  • You are allowed to fund the account with pre-tax income and take a deduction on contributions made during the the current tax year.

MoneyWi$e: Saving to Build Wealth


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Traditional IRAs

  • In 2003, most taxpayers were allowed to set aside up to $3,000 in an IRA.

  • People over age 50 could deposit $3,500 per year.

MoneyWi$e: Saving to Build Wealth


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Roth IRAs

  • Roth IRAs are not tax-deferred - you invest income you have already paid tax on.

  • All the money you earn in your Roth IRA is tax-free.

MoneyWi$e: Saving to Build Wealth


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Employment retirement plans

  • Employers usually match the funds that you contribute to your retirement plan at work.

  • At tax time, you will owe less money.

MoneyWi$e: Saving to Build Wealth


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Saving for education

  • There are a number of special accounts that can help you save for your children’s college educations.

MoneyWi$e: Saving to Build Wealth


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Savings Slogan Activity

  • Make your slogan

    • No more than 15 words.

    • Inspirational.

    • Persuasive to people of all ages and all walks of life.

MoneyWi$e: Saving to Build Wealth


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Questions and Answers

  • We have reserved some time to answer your questions.

  • Please put your hand up if you have a question.

MoneyWi$e: Saving to Build Wealth


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Congratulations!

  • You have completed the MoneyWi$e seminar on Saving to Build Wealth!

MoneyWi$e: Saving to Build Wealth


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Your feedback

  • Please fill out the Seminar Evaluation Form and leave it on your way out.

MoneyWi$e: Saving to Build Wealth


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