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Retire a Millionaire

Retire a Millionaire. Steps. 1 Manage your income 2 Manage your spending 3 Start an emergency fund 4 Pay down debt 5 Invest. Manage your income. Ensure you are paid the correct amount each month. Ensure monthly deductions are going where they are supposed to. Manage your spending .

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Retire a Millionaire

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  1. Retire a Millionaire

  2. Steps • 1 Manage your income • 2 Manage your spending • 3 Start an emergency fund • 4 Pay down debt • 5 Invest

  3. Manage your income • Ensure you are paid the correct amount each month. • Ensure monthly deductions are going where they are supposed to.

  4. Manage your spending • Budget • Stick to the budget • Avoid the “Latte Factor”

  5. The “Latte Factor” • Coffee in the morning $2.00 • Soda from the vending machine $1.00 • Chicken and Cheese Special $6.00

  6. The “Latte Factor” $2.00 $1.00 +$6.00 $9.00 a day 5 days a week $45.00 a week 45 weeks a year $2025 a year

  7. Start an emergency fund • Should be in “liquid” account • Equal to 3 months pay • Uses include unexpected car repairs, emergency leave travel

  8. Pay down debt Pay off high interest accounts first Credit Cards 10% - 25% Car loans 5% - 10% Student loans 5% - 10%

  9. Credit Cards • Call company and ask for lower APR • Avoid fees from late or missed payments

  10. Your credit report • www.equifax.com • About $20 • Verify all information on credit report is accurate and correct. If an error is found write a letter to Equifax and have them fix the mistake.

  11. InvestTax advantage account TSP (Thrift Savings Plan) IRA (Individual Retirement Account) -Traditional -ROTH 401k (Civilian equivalent to TSP)

  12. Traditional IRA • Investment is tax free. Income tax is paid upon withdrawal, starting at age 59.5 • Must start withdrawing at age 72

  13. ROTH IRA • Investment is taxable. Withdrawal starting at age 59.5 is tax free. • Withdrawals are not mandatory at any age. • Can be willed to your heirs.

  14. IRA’s • Maximum contribution is currently $3000 per year. • Can invest up to April 15th for the year prior. • In 2004 max contribution is $3000 • In 2005 max contribution increases to $4000

  15. Example • On March 30th 2004 you can invest $3000 for FY 2003 and $3000 for FY 2004.

  16. Invest Start early Stay disciplined

  17. Low risk investments • Savings account, Money Market account 0.5% - 1.5% • CD (certificate of deposit) 1.0% - 3.5% • Treasury Bills (Savings Bonds) • Rate changes every 6 months • Federal Reserve sets rate • Currently 2.61% for series EE bonds 2.19% for series I bonds

  18. Medium risk investments • Mutual Funds • Sector Funds • Corporate Bonds • Municipal Bonds • Commodities

  19. High risk investments • Stocks • IPO’s • Options

  20. You control your financial destiny

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