Financing Your Future Module 5 of Family Financial Freedom

1. Workshop Module Five: Financing Your Future Saunders Learning Group, Newton, KS

2. Saunders Learning Group provides a variety of training programs, workshops and seminars targeted to the financial services industry. Programs are available in a wide range of topics, and we are specialists in developing custom programs that are targeted to your needs. Contact the founder, Floyd Saunders at 316-‐680-‐6482 or at floyd@floydsaunders.com for more informaKon. Saunders Learning Group, Newton, KS Financing Your Future 2 Training from Saunders Learning Group

3. Agenda Investments and Risks vs. Return Selecting Investments for You Short-term Investments Long-term Investments Stock Market Investments Retirement Programs Creating The Action Plan Saunders Learning Group, Newton, KS Financing Your Future

4. "Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery.” -‐ Charles Dickens Saunders Learning Group, Newton, KS Financing Your Future 4

5. Risk vs return tradeoff Saunders Learning Group, Newton, KS Financing Your Future

6. Investments and Risk vs. Return ! Commodities ! Collectibles ! Option Trading ! Coins ! Gold & Precious Metals ! Currency Trading ! Real Estate ! Equipment leasing ! Oil & Gas ! Common Stock ! Investment Real Estate ! Blue Chip Stocks ! Equity/Income Mutual Funds ! Annuities ! Corporate Bonds ! Municipal Bonds Saunders Learning Group, Newton, KS Financing Your Future subtitle Degree of risk Potential Return ! Insurance ! Treasury Bills ! Money Market Fund ! Certificate of Deposit ! Checking and Savings Less Risk More Risk Lower Return Higher Return

7. Selecting the Right Investments for You Saunders Learning Group, Newton, KS Financing Your Future subtitle " Consider both the potenKal return and risk of any investment " Understand your needs and goals " Select investments that meet your needs and goals consistent with the risks you are willing to take

8. Short-Term Investments Savings Accounts Certificates of Deposit Money Market Deposit Accounts Money Market Mutual Funds Savings Bonds, Treasury Bills and Notes subtitle Saunders Learning Group, Newton, KS Financing Your Future

9. Savings Accounts " Savings accounts are accounts at financial insKtuKons designed to keep your money safe and help it grow. " In exchange for leaving your money on deposit, your bank pays you interest. " Compounding of the interest and deposits help it grow. Saunders Learning Group, Newton, KS Financing Your Future

10. Risks and Rewards of Saving As the possibility of profit goes higher, so does the risk that you might lose your money. Saunders Learning Group, Newton, KS Financing Your Future

11. 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. Saunders Learning Group, Newton, KS Financing Your Future

12. The Money Market # Buying and selling short-term debt securities; quick cash conversion # Safety: short maturities and diversification # Include Private Paper: # Commercial paper # Bankers’ acceptances (Bas) # Jumbo CDs # State & Local Governments: Project Notes # tax anticipation notes # bond anticipation notes # revenue anticipation notes Saunders Learning Group, Newton, KS Financing Your Future

13. Certificates of Deposit or Time Deposits CerKficates of deposit (CDs) are a safe way to make your money grow. " A CD (cerKficate of deposit) is a safe way to save. — Like savings accounts, CDs are insured by the government. — CDs oVen earn a higher interest rate than savings accounts do. — However, CDs require that you leave your money for a set period of Kme, such as six months or a year. Saunders Learning Group, Newton, KS Financing Your Future

14. U.S. Treasury Investments " Include Savings Bonds and Treasury Bills. Saunders Learning Group, Newton, KS Financing Your Future

15. U.S. Savings Bonds Interest can vary, but you are always guaranteed a minimum return. Saunders Learning Group, Newton, KS Financing Your Future

16. 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. Saunders Learning Group, Newton, KS Financing Your Future

17. 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. Saunders Learning Group, Newton, KS Financing Your Future

18. Long-Term Investments Corporate Bonds Municipal Bonds Unit Investment Trusts subtitle date 18 Saunders Learning Group, Newton, KS Financing Your Future

19. What is a Bond? " In financial terms a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest (the coupon) and/or to repay the principal at a later date, termed maturity. " A bond is a formal contract to repay borrowed money with interest at fixed intervals. Saunders Learning Group, Newton, KS Financing Your Future

20. Issuing bonds " Bonds are issued by public authoriKes, credit insKtuKons, companies and supranaKonal insKtuKons in the primary markets. " The most common process of issuing bonds is through underwriKng. " In underwriKng, one or more securiKes firms or banks, forming a syndicate, buy an enKre issue of bonds from an issuer and re-‐sell them to investors. " The security firm takes the risk of being unable to sell on the issue to end investors. Saunders Learning Group, Newton, KS Financing Your Future

21. Municipal Securities # Municipal Bonds # Bonds anKcipaKng future cash # Tax-‐AnKcipaKon Notes # Bond-‐anKcipaKon Notes # Revenue-‐AnKcipaKon Notes # Clientele Effect # High tax bracket investors Saunders Learning Group, Newton, KS Financing Your Future # Limited Tax Bonds # Payable from cash generated by specific tax # Revenue Bonds # Industrial Revenue Bonds # Backed by Good Name of Municipality # Moral ObligaKon Bonds # General ObligaKon (GO) Bonds # Double-‐Barreled Bonds # Backed by 2+ sources of funds

22. " A UIT issues redeemable securiKes (or "units"), like a mutual fund, which means that the UIT will buy back an investor’s "units," at the investor’s request. " A UIT typically will make a one-‐Kme "public offering" of only a specific, fixed number of units (like closed-‐end funds) " A UIT will have a terminaKon date (a date when the UIT will terminate and dissolve " A UIT does not acKvely trade its investment porjolio. Saunders Learning Group, Newton, KS Financing Your Future

23. UNDERSTANDING STOCKS Investors buy stocks in the hopes of earning a large return on their investments. Saunders Learning Group, Newton, KS Financing Your Future

24. Stock Market Risk There is no guarantee that stock prices will go up or that you will make money on stocks. Saunders Learning Group, Newton, KS Financing Your Future

25. Evaluating Stocks Blue-chip stocks Income stocks Growth stocks Cyclical stocks Saunders Learning Group, Newton, KS Financing Your Future

26. Defensive stocks Large-cap stocks Small-cap stocks Penny stocks Saunders Learning Group, Newton, KS Financing Your Future

27. Mutual Funds Each investor in a fund shares in the fund’s gains, losses and expenses. Suitable for longer term goals, once you have a stable financial foundaKon Saunders Learning Group, Newton, KS Financing Your Future

28. Retirement Plans Saunders Learning Group, Newton, KS Financing Your Future

29. Traditional IRAs " Most taxpayers can set aside up to $5,000 in an IRA. " People over age 50 can deposit $6,000 per year. Saunders Learning Group, Newton, KS Financing Your Future

30. Tax breaks on IRAs You are allowed to fund the account with pre-‐ tax income and take a deducKon on contribuKons made during the the current tax year. Saunders Learning Group, Newton, KS Financing Your Future

31. 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. Saunders Learning Group, Newton, KS Financing Your Future

32. Employer retirement plans " Employers usually match the funds that you contribute to your reKrement plan at work. " At tax Kme, you will owe less money. Saunders Learning Group, Newton, KS Financing Your Future

33. Annuities An annuity a contract between two parties, called the insured and an insurance company. The insurance company agrees to pay the insured an agreed upon benefit either in the form of regular interval payments or in lump sum. Saunders Learning Group, Newton, KS Financing Your Future

34. How An Annuity Works " In its simplest form, you pay money to an annuity issuer, and the issuer pays out the principal and earnings back to you or to a named beneficiary. " Life insurance companies first developed annuiKes to provide income to individuals during their reKrement years. Saunders Learning Group, Newton, KS Financing Your Future

35. Different Types of Annuity " Single Premium Immediate Annuity: The amount is paid in lump sum and the benefits are derived from the immediate next month onwards. " Single Premium Deferred Annuity: Again, the amount is paid in lump sum but the withdrawals can be made only aVer specified Kme limit. " Annual Premium Deferred Annuity: The premium paid to the insurance company is either in form of quarterly, or monthly or bi-‐annual or annual installments. Withdrawals are deferred to a later date. " Variable Annuity: This is more of a combinaKon annuity scheme where you can chose either to pay a lump sum amount or in installments. You can choose the investment vehicle as well. Thus, the growth of your fund depends on vehicle chosen. Saunders Learning Group, Newton, KS Financing Your Future

36. Tax Deferral " One of the alracKve aspects of an annuity is that its earnings are tax deferred unKl you begin to receive payments back from the annuity issuer. " In this respect, an annuity is similar to a qualified reKrement plan. " Over a long period of Kme, your investment in an annuity can grow substanKally larger than if you had invested money in a comparable taxable investment. Saunders Learning Group, Newton, KS Financing Your Future

37. Structure of Annuity 1. Premiums are paid to annuity company 2. Premiums are in company’s general account 3. The General Account accumulates funds 4. Fees and expenses are deducted 5. Death benefits paid out (it applicable 6. Withdrawals occur (6,7 & 8) 9. Taxes are paid Saunders Learning Group, Newton, KS Financing Your Future Slide 37

38. Immediate Annuity If you want to start receiving payments within the first year, you'll purchase an immediate annuity. " You can elect to receive payments over both your lifeKme and the lifeKme of another person (known as a joint and survivor annuity). " Under a joint and survivor annuity, the annuity issuer promises to pay you an amount of money on a periodic basis (e.g., monthly, quarterly, or yearly). Saunders Learning Group, Newton, KS Financing Your Future

39. " If you are age 65 and elect to receive annuity distribuKons over your enKre lifeKme. " The amount you will receive with each payment will be less than if you had elected to receive annuity distribuKons over five years. Saunders Learning Group, Newton, KS Financing Your Future

40. Distribution Options The distribuKon phase is when you begin receiving distribuKons. " You have two opKons: — Under the first opKon, you can withdraw some or all of the money in the annuity in lump sums. — The second opKon (referred to as the guaranteed income or annuiKzaKon opKon) provides a guaranteed income stream for your enKre lifeKme (no maler how long you live) or for a specific period of Kme (e.g., 10 years). (Guarantees are based on the claims-‐paying ability of the issuing insurance company.) This opKon can be elected at any Kme on your deferred annuity. Saunders Learning Group, Newton, KS Financing Your Future

41. Annuity Payments The amount you receive for each payment period will depend on: " how much money you have in the annuity " how earnings are credited to your account (whether fixed or variable) " the age at which you begin the annuiKzaKon phase. " The length of the distribuKon period will also affect how much you receive. Saunders Learning Group, Newton, KS Financing Your Future

42. Early Withdrawals and Taxes " Like a qualified reKrement plan, a 10 percent tax penalty may be imposed if you begin withdrawals from an annuity before age 59½. " Unlike a qualified reKrement plan, contribuKons to an annuity are not tax deducKble, and taxes are paid only on the earnings when distributed. Saunders Learning Group, Newton, KS Financing Your Future

43. Questions Saunders Learning Group, Newton, KS Financing Your Future

44. Post Workshop Action Plan " Complete the Post Workshop AcKon Plan Saunders Learning Group, Newton, KS Financing Your Future 44

45. Reference Material Family Financial Freedom 140 pages ISBN 978-1-60-746269-9 Available Formats: 6"x9" paperback PDF download eBook download Link to order: http://www.fastpencil.com/publications/4498-Family-Financial-Freedom? tid=bookbuy#read_book Also available on Kndle, Nook, iPad and other popular e-readers can be ordered from Amazon or Barnes and Noble in paperback (available soon). Book summary: You might be struggling to make ends meet, but achieving true financial freedom is still possible. The good news is virtually anyone with a desire to learn and the willingness to plan can achieve a considerable degree of financial security. This book is a road map to the personal financial freedom you want and deserve. There are no quick-rich schemes here, just common sense advice on how to manage your money, protect your family from risks and start making the moves to being more financial secure. Saunders Learning Group, Newton, KS Financing Your Future

46. Family Financial Freedom Seminars • This series of seminars on family financial freedom is available to all trainers, educators and professional advisors in the financial services industry. • The series of seminars can be taught with or without the book, “Family Financial Freedom”. • Here is a full listing of seminar topics: 1. Gerng Started 2. Making Your Money Work For You 3. Building the Base 4. Securing the Base 5. Financing Your Future 6. Mutual Funds 7. Real Estate 8. Your investments 9. ReKre in Comfort 10. Passing On Your Wealth 11. How Professional Can Help • A leader’s guide and participant’s workbook is also available. Order your copy from Scribd • Contact the author, Floyd Saunders for pricing and order details to purchase the entire series of seminars: floyd.saunders@yahoo.com Saunders Learning Group, Newton, KS Financing Your Future