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Saving TO BUILD WEALTH

a. Welcome to. Saving TO BUILD WEALTH. Make money work for YOU. © 2011. Money WI$E . A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP. Saving to Build Wealth. MoneyWI$E A joint financial education project of Consumer Action and Capital One. Money WI$E .

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Saving TO BUILD WEALTH

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  1. a Welcome to Saving TO BUILD WEALTH Make money work for YOU © 2011 MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  2. Saving to Build Wealth • MoneyWI$E • A jointfinancialeducationprojectof Consumer Action and Capital One. MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  3. 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 A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  4. Your expectations • What do you hope to get out of this seminar? MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  5. Getting started • Building wealth is like building a brick wall. MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  6. 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 A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  7. Barriers to saving • Credit cards • Debt payments • Ads for new products such as cars, electronics and clothing. MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  8. Emergency savings • You can’t build wealth overnight. • A good first goal is a savings account for emergencies. MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  9. Auto-pilot savings • Set up automatic deposits to a savings account. MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  10. Easy money • Money that is easily available is said to be liquid. MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  11. Easy money • Financial goals are personal benchmarks that you set for yourself throughout life. • Long term goals • Short term goals MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  12. Dream Your Goals • This activity will help you put an approximate price tag on your financial goals. MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  13. Savings accounts • Savings accounts are accounts at financial institutions designed to keep your money safe and help it grow. MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  14. 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 A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  15. Two kinds of interest • Simple • Compound MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  16. Opening an account • Shop around for good terms • You will need identification (ID) • Initial deposit MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  17. IDAs • Individual development accounts (IDAs) are special sponsored savings accounts for low income families. • Most IDAs match what you save. MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  18. 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 A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  19. 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 A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  20. Risks and rewards • As the possibility of profit goes higher, so does the risk that you might lose your money. MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  21. 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 A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  22. Mutual funds • Each investor in a fund shares in the fund’s gains, losses and expenses. MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  23. Uninsured investments • The fact that you purchase an investment from your bank does not mean that your investment is government-insured. MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  24. Stock market risk • There is no guarantee that stock prices will go up or that you will make money on stocks. MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  25. CD, or Time Deposits • Certificates of deposit (CDs) are a safe way to make your money grow. MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  26. 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 A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  27. Avoid ‘callable’ CDs • There are a good deal for the bank and a bad deal for you. MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  28. U.S. Treasury Investments • Include Savings Bonds and Treasury Bills. MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  29. U.S. Savings Bonds • Interest can vary, but you are always guaranteed a minimum return. MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  30. 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 A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  31. 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 A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  32. IRAs for retirement savings • Individual retirement accounts (IRAs) are savings accounts designed to help people put away money for their retirement. MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  33. 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 A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  34. Traditional IRAs • In 2011, most taxpayers can set aside up to $5,000 in an IRA. • People over age 50 can deposit $6,000 per year. MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  35. 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 A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  36. 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 A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  37. Saving for education • There are a number of special accounts that can help you save for your children’s college educations. MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  38. 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 A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  39. Questions and Answers • We have reserved some time to answer your questions. • Please put your hand up if you have a question. MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  40. Congratulations! • You have completed the MoneyWI$E seminar on Saving to Build Wealth! MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  41. Your feedback • Please fill out the Seminar Evaluation Form and leave it on your way out. MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

  42. Visit money-wise.orgfor additional information and to access free financial education materials MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

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