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Saving to Build Wealth MoneyWi$e A joint financial education project of Consumer Action and Capital One © 2009 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
Saving to Build Wealth

MoneyWi$e

A joint financial education project of Consumer Action and Capital One

© 2009

MoneyWi$e: Saving to Build Wealth

topics we will cover
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

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

MoneyWi$e: Saving to Build Wealth

getting started
Getting started
  • Building wealth is like building a brick wall.

MoneyWi$e: Saving to Build Wealth

needs and wants
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

barriers to saving
Barriers to saving
  • Credit cards
  • Debt payments
  • Ads for new products such as cars, electronics and clothing.

MoneyWi$e: Saving to Build Wealth

emergency savings
Emergency savings
  • You can’t build wealth overnight.
  • A good first goal is a savings account for emergencies.

MoneyWi$e: Saving to Build Wealth

auto pilot savings
Auto-pilot savings
  • Set up automatic deposits to a savings account.

MoneyWi$e: Saving to Build Wealth

easy money
Easy money
  • Money that is easily available is said to be liquid.

MoneyWi$e: Saving to Build Wealth

setting goals
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

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

MoneyWi$e: Saving to Build Wealth

savings accounts
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

interest
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

two kinds of interest
Two kinds of interest
  • Simple
  • Compound

MoneyWi$e: Saving to Build Wealth

opening an account
Opening an account
  • Shop around for good terms
  • You will need identification (ID)
  • Initial deposit

MoneyWi$e: Saving to Build Wealth

slide16
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

next time we will cover
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

welcome to session two
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

risks and rewards
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

insured accounts
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

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

MoneyWi$e: Saving to Build Wealth

uninsured investments
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

stock market risk
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

cd or time deposits
CD, or Time Deposits
  • Certificates of deposit (CDs) are a safe way to make your money grow.

MoneyWi$e: Saving to Build Wealth

cds any downside
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

avoid callable cds
Avoid ‘callable’ CDs
  • These are a good deal for the bank and a bad deal for you.

MoneyWi$e: Saving to Build Wealth

u s treasury investments
U.S. Treasury Investments
  • Include Savings Bonds and Treasury Bills.

MoneyWi$e: Saving to Build Wealth

u s savings bonds
U.S. Savings Bonds
  • Interest can vary, but you are always guaranteed a minimum return.

MoneyWi$e: Saving to Build Wealth

treasury bills
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

t bill example
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

iras for retirement savings
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

tax breaks on iras
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

traditional iras
Traditional IRAs
  • In 2009, most taxpayers can set aside up to $5,000 in an IRA.
  • People over age 50 can deposit $6,000 per year.

MoneyWi$e: Saving to Build Wealth

roth iras
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

employment retirement plans
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

saving for education
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

savings slogan activity
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

questions and answers
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

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

MoneyWi$e: Saving to Build Wealth

your feedback
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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