Download - How to manage your savings
![Page 1: How to manage your savings](https://reader035.vdocument.in/reader035/viewer/2022062523/58f1efa71a28ab306e8b4589/html5/thumbnails/1.jpg)
HOW TO MANAGE YOUR SAVINGS & FOLLOW A HEALTHY PERSONAL
FINANCIAL PLAN
DEYAN VASSILEV / Chairman, Finzoom
www.finzoom.ro
![Page 2: How to manage your savings](https://reader035.vdocument.in/reader035/viewer/2022062523/58f1efa71a28ab306e8b4589/html5/thumbnails/2.jpg)
THIS PRESENTATION IS 15 % SOLUTION
• It says nothing new and original;• It explains basic and simple principles of
financeBUT…..• Sometimes it requires a lot of patience, focus
and discipline to succeed;• "85% of your financial success is due to your
personality and ability to communicate, negotiate and lead. Shockingly, only 15% is due to technical knowledge.” Carnegie
www.finzoom.ro
![Page 3: How to manage your savings](https://reader035.vdocument.in/reader035/viewer/2022062523/58f1efa71a28ab306e8b4589/html5/thumbnails/3.jpg)
ABOUT FINZOOM.RO
• FinZoom’s mission is to empower millions of consumers to make well-informed decisions about their personal finances.
• 10 years of information and education to consumers of financial products and services in Romania.
• FinZoom.ro compares all financial products in Romania (loans, credit cards, deposits, accounts, leasing, investment funds and pension RCA).
• Articles, Analyses, Consumer Advices
www.finzoom.ro
![Page 4: How to manage your savings](https://reader035.vdocument.in/reader035/viewer/2022062523/58f1efa71a28ab306e8b4589/html5/thumbnails/4.jpg)
FINANCIAL PLANNING
A comprehensive evaluation of current and future financial state by using known inputs to project future cash-flows, asset values and withdrawal plans.•Your Budgeting•Your Net worth•Setting of your financial goals (really, life goals)•Adjustments to achieve your goals•Measure your progress and update plan
www.finzoom.ro
![Page 5: How to manage your savings](https://reader035.vdocument.in/reader035/viewer/2022062523/58f1efa71a28ab306e8b4589/html5/thumbnails/5.jpg)
FINANCIAL GOALS
• Saving for retirement• Saving for children’s education• Buying and apartment (downpayment)• Buying a car• Saving for a vacation• Having an emergency fund
Goals should be clear, compatible and achievable / realistic.
www.finzoom.ro
![Page 6: How to manage your savings](https://reader035.vdocument.in/reader035/viewer/2022062523/58f1efa71a28ab306e8b4589/html5/thumbnails/6.jpg)
PERSONAL BUDGET
REVENUES EXPENSESACTIVE INCOME Food and clothing• Salary from labor contract Home• Free-lance contract Utility bills• Bonuses Transportation • Commissions Credits (loans, credit cards)PASSIVE INCOME Health • Rent Holidays and travel• Interest Insurances (life, car, home)• Capital gains / Dividend Education• Royalties Hobbies / Sports / Vices /• Pensions Charity / Other
![Page 7: How to manage your savings](https://reader035.vdocument.in/reader035/viewer/2022062523/58f1efa71a28ab306e8b4589/html5/thumbnails/7.jpg)
NET WORTH STATEMENT
ASSETS LIABILITIESMoney and equivalents Personal loansCash, bank accounts, deposits, money funds
Credit cards balances
Life insurance value Mortgages and personal loansFinancial instruments LeasingShares, bonds, ETFs, Funds Other payables and obligationsRetirement accountsPersonal Assets NET WORTHReal estate – aparts, land Total Assets – Total LiabilitiesVehicles, Appliances, GadgetJewelry, Art, Precious metals
![Page 8: How to manage your savings](https://reader035.vdocument.in/reader035/viewer/2022062523/58f1efa71a28ab306e8b4589/html5/thumbnails/8.jpg)
SOUND FINANCIAL PLAN STEPS
• Step 0: Track that each month you spend less than you earn;• Step 1: Secure your basic needs: food, clothing, place to live.• Step 2: Insure yourself against the basic risks – your home, health, car• Step 3: Build your emergency, “rainy day” fund• Step 4: Pay off the expensive consumer loans and credit cards ASAP
(excluding mortgage)• Step 5: Increase your emergency fund to cover 6 to 10 months of
expenses• Step 6: Start saving up to 10 % of your income for your retirement (see
calculator)• Step 7: Save for your other financial goals (education of children,
downpayment for your home, repairs, new car, holiday fund, etc)• Step 8: Pay off your mortgage loan early but not before the steps before• Step 9: Keep saving and investing wisely, don’t expect miracles• Step 10: Continue educating yourself, express your values with your
money
www.finzoom.ro
![Page 9: How to manage your savings](https://reader035.vdocument.in/reader035/viewer/2022062523/58f1efa71a28ab306e8b4589/html5/thumbnails/9.jpg)
3 BASIC PRINCIPLES OF SAVING
www.finzoom.ro
1) START EARLY! Use the power of compounding of interest. The sooner you start the better!
2) Try to set aside 10 % or more of your current income to have a chance to meet your financial goals;
3) Save / Invest in a diversified portfolio, at least some portion should be in shares (the long-term saving part) and depending on your attitude toward risk/return
![Page 10: How to manage your savings](https://reader035.vdocument.in/reader035/viewer/2022062523/58f1efa71a28ab306e8b4589/html5/thumbnails/10.jpg)
START EARLY - RETIREMENT
www.finzoom.ro
Profile WomanMan Msn3
Born 1984 1984 1970Retiring 2047 2049 2035Accumulated 4 000 RON 4 000 RON 4 000 RONGross Salary 2 400 2 400 2 400Contribution 5.1% 122.40 122.40 122.40Expected return 4 % 4 % 4 %Total accumulated 101 455 112 867 49 198Monthly pension 423 RON 470 RON 205 RON
• Obligatory Pensions Calculator: http://www.finzoom.ro/Calculatoare/calculator-de-pensii
![Page 11: How to manage your savings](https://reader035.vdocument.in/reader035/viewer/2022062523/58f1efa71a28ab306e8b4589/html5/thumbnails/11.jpg)
START EARLY - RETIREMENT
www.finzoom.ro
“Power of compounding! The 8th wonder of the world! He who understands it – earns it, he who doesn’t – pays it!” Albert Einstein
Person 1: Saves 100 RON per month for 10 years between 25 35 and then letting the saved amount accumulate interest over 30 more years.
Person 2: Starts saving 100 RON at the age of 35 till retiring at 65. (30y years saving plan)
RESULTS TOTAL DEPOSITED
TOTAL ACCUMULATED
COMPOUNDED INTEREST
Person 1 12 000 99 197 87 197
Person 2 36 000 100 959 64 959
![Page 12: How to manage your savings](https://reader035.vdocument.in/reader035/viewer/2022062523/58f1efa71a28ab306e8b4589/html5/thumbnails/12.jpg)
HOW TO SAVE FOR BETTER RETURNS
www.finzoom.ro
How do Romanians save now?
Source: Capgemini and RBC Wealth Management, 2013 World Wealth Report. Real Estate excludes primary residence.
![Page 13: How to manage your savings](https://reader035.vdocument.in/reader035/viewer/2022062523/58f1efa71a28ab306e8b4589/html5/thumbnails/13.jpg)
TOTAL DEPOSITS OF ROMANIANS
www.finzoom.ro
Year Total* Term≤1 an
Term> 1 an
2012 99 134 90 939 8 1952013 104 194 93 708 10 4852014 106 628 93 847 12 7812015 106 873 91 520 15 353
Mar 16 106 174 90 351 15 822*Million RONSource: National Bank of Romania
![Page 14: How to manage your savings](https://reader035.vdocument.in/reader035/viewer/2022062523/58f1efa71a28ab306e8b4589/html5/thumbnails/14.jpg)
www.finzoom.ro
DEPOSIT RATES IN RON AND EUR
![Page 15: How to manage your savings](https://reader035.vdocument.in/reader035/viewer/2022062523/58f1efa71a28ab306e8b4589/html5/thumbnails/15.jpg)
MONEY IN INVESTMENT FUNDS
www.finzoom.ro
*Million RONSource: AAF (Asociatia Administratorilor de Fonduri din Romania)
Year Total funds* Domestic Foreign
2012 8 678 8 678 -2013 10 313 10 230 832014 14 244 13 877 3662015 16 222 15 708 514
Mar 16 16 306 15 833 473
![Page 16: How to manage your savings](https://reader035.vdocument.in/reader035/viewer/2022062523/58f1efa71a28ab306e8b4589/html5/thumbnails/16.jpg)
DEPOSITS VS MUTUAL FUNDS
www.finzoom.ro
*Million RONSource: BNR and AAF
Year Total funds* Deposits
Mar 16 16 306 106 174
Share 13 % 87 %
![Page 17: How to manage your savings](https://reader035.vdocument.in/reader035/viewer/2022062523/58f1efa71a28ab306e8b4589/html5/thumbnails/17.jpg)
(NORMAL) DISTRIBUTION OF WEALTH
www.finzoom.ro
54.7%
Shares and alternative
investmentsBONDS CASH AND
DEPOSITSREAL
ESTATE
Source: Capgemini and RBC Wealth Management, 2013 World Wealth Report. Real Estate excludes primary residence .
![Page 18: How to manage your savings](https://reader035.vdocument.in/reader035/viewer/2022062523/58f1efa71a28ab306e8b4589/html5/thumbnails/18.jpg)
HOW TO INVEST FOR BETTER RETURNS
www.finzoom.ro
OK, Compounding is the 8th wonder and we are losing by not using it now…BUT, HOW TO INVEST FOR HIGHER RETURN? The answer is simple:•Use a reputable mutual fund (international or local) with solid track record.•Start with a monthly saving plan (i.e. 50 EUR / month)•Be ware of your attitude towards volatility and periods of losses.•Past performance does not guarantee future returns
![Page 19: How to manage your savings](https://reader035.vdocument.in/reader035/viewer/2022062523/58f1efa71a28ab306e8b4589/html5/thumbnails/19.jpg)
TYPES OF MUTUAL FUNDS
www.finzoom.ro
![Page 20: How to manage your savings](https://reader035.vdocument.in/reader035/viewer/2022062523/58f1efa71a28ab306e8b4589/html5/thumbnails/20.jpg)
PRINCIPLE OF INVESTING IN SHARES
www.finzoom.ro
Shares and mutual funds in shares are more risky, i.e. higher returns, but higher volatility
Such investments should be for longer time horizons – i.e. above 5 years
The regular investor cannot “time the market”, so it is better to average the cost of buying both highs and lows in a volatile market.
![Page 21: How to manage your savings](https://reader035.vdocument.in/reader035/viewer/2022062523/58f1efa71a28ab306e8b4589/html5/thumbnails/21.jpg)
RETURNS STABILIZE OVER LONG TERM
www.finzoom.ro Return on S&P from 1926 - 2005
![Page 22: How to manage your savings](https://reader035.vdocument.in/reader035/viewer/2022062523/58f1efa71a28ab306e8b4589/html5/thumbnails/22.jpg)
BENEFITS OF REGULAR INVESTING
www.finzoom.ro
DateDate
Price 8 Price
7
Price 5
Price 12
Investment Unit price # Current value2,500 10 250
Total 2 500 8 250 2,000
Investment Unit price # Cur Value500 10 50500 5 100500 7 71.4500 12 41.6500 8 62.5
Общо 2 500 7.68 325.5 2,604
The difference is interesting
Price10
More for a smaller price.
Ø price 7.68
This graph is only for illustrative purposes
![Page 23: How to manage your savings](https://reader035.vdocument.in/reader035/viewer/2022062523/58f1efa71a28ab306e8b4589/html5/thumbnails/23.jpg)
EXPECTED RETURNS OVER 30 years
www.finzoom.ro
5,8к
6,7к7,2к
7,8к
5,4к
49к*
33,5к
22,9к
15,6к
10,7к
12,3к
6,2к
-4,5к
5к
5г 10г 15г 20г 25г 30г
28,1к48,3к
77,6к
121к
183к
7,3к
The difference would be enough to pay a pension of ~ 750 monthly for 20 years
+ 100 monthly
50/50 – shares/bons– 7,9%
Deposit – 1.5% CAGR since 1926
With monthly instalment of 100 – 7,9%
Inflation – 3%Historical data for S&P and bonds since 1926г
![Page 24: How to manage your savings](https://reader035.vdocument.in/reader035/viewer/2022062523/58f1efa71a28ab306e8b4589/html5/thumbnails/24.jpg)
RICHES VS. WEALTH
“The wealthy buy luxuries last, while the poor and middle-class tend to buy luxuries first. Why? Emotional discipline.”
“The definition of wealth is the number of days you can survive without physically working (or anyone in your household physically working) and still maintain your standard of living.”
Robert Kiyosaki, “Rich Dad, Poor Dad”
www.finzoom.ro
![Page 25: How to manage your savings](https://reader035.vdocument.in/reader035/viewer/2022062523/58f1efa71a28ab306e8b4589/html5/thumbnails/25.jpg)
FINAL THOUGHT
www.finzoom.ro
YOUR FUTURE IS DETERMINED BY WHAT YOU DO TODAY,
NOT TOMORROW
![Page 26: How to manage your savings](https://reader035.vdocument.in/reader035/viewer/2022062523/58f1efa71a28ab306e8b4589/html5/thumbnails/26.jpg)
Thank you for your attention!
www.finzoom.ro
DEYAN VASSILEV/ Chairman
FINZOOM.ROБЪЛГАРСКИЯТ ФИНАНСОВ ПЪТЕВОДИТЕЛ
БУЛ. "СТЕФАН СТАМБОЛОВ" 28, ЕТ. 2. СОФИЯ
Тел: +359 2 987 50 88 / Мобилен: 359 88 8351 943e-mail: [email protected]