a saving to build wealth welcome to moneywi$e a consumer action and capital one partnership make...
TRANSCRIPT
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a
Saving TO BUILD WEALTH
Welcome to
MoneyWI$E
A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Make money work for YOU
© 2011
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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.
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Your expectations
What do you hope to get out of this seminar?
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Getting started
Building wealth is like building a brick wall.
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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.
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Barriers to saving
Credit cards
Debt payments
Ads for new products such as cars, electronics and clothing.
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Emergency savings
You can’t build wealth overnight.
A good first goal is a savings account for emergencies.
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Auto-pilot savings
Set up automatic deposits to a savings account.
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Easy money
Money that is easily available is said to be liquid.
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Easy money
Financial goals are personal benchmarks that you set for yourself throughout life.
• Long term goals
• Short term goals
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Dream Your Goals
This activity will help you put an approximate price tag on your financial goals.
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Savings accounts
Savings accounts are accounts at financial institutions designed to keep your money safe and help it grow.
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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.
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Two kinds of interest
Simple
Compound
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Opening an account
Shop around for good terms
You will need identification (ID)
Initial deposit
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IDAs
Individual development accounts (IDAs) are special sponsored savings accounts for low income families.
Most IDAs match what you save.
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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
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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
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Risks and rewards
As the possibility of profit goes higher, so does the risk that you might lose your money.
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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.
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Mutual funds
Each investor in a fund shares in the fund’s gains, losses and expenses.
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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.
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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.
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CD, or Time Deposits
Certificates of deposit (CDs) are a safe way to make your money grow.
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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.
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Avoid ‘callable’ CDs
There are a good deal for the bank and a bad deal for you.
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U.S. Treasury Investments
Include Savings Bonds and Treasury Bills.
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U.S. Savings Bonds
Interest can vary, but you are always guaranteed a minimum return.
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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.
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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.
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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.
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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.
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Traditional IRAs
In 2011, most taxpayers can set aside up to $5,000 in an IRA.
People over age 50 can deposit $6,000 per year.
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Roth IRAs
Roth IRAs are not tax-deferred - you invest income you have already paid tax on.
All the money you earn in your Roth IRA is tax-free.
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Employment retirement plans
Employers usually match the funds that you contribute to your retirement plan at work.
At tax time, you will owe less money.
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Saving for education
There are a number of special accounts that can help you save for your children’s college educations.
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Savings Slogan Activity
Make your slogan
• No more than 15 words.
• Inspirational.
• Persuasive to people of all ages and all walks of life.
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Questions and Answers
We have reserved some time to answer your questions.
Please put your hand up if you have a question.
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Congratulations!
You have completed the MoneyWI$E seminar on Saving to Build Wealth!
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Your feedback
Please fill out the Seminar Evaluation Form and leave it on your way out.
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MoneyWI$E
A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Visit money-wise.org for additional information and
to access free financial education materials