MoneyWi$e: Saving to Build Wealth Saving to Build Wealth MoneyWi$e A joint financial education...

MoneyWi$e: Saving to Build Wealth

Saving to Build Wealth

MoneyWi$eA joint financial education project of Consumer Action and Capital One

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.

Your expectations

What do you hope to get out of this seminar?

Getting started

Building wealth is like building a brick wall.

Needs and wants

Needs are things you use or require every day.

Wants are things you would love to have but can live without.

Barriers to saving

Credit cards Debt payments Ads for new products such as

cars, electronics and clothing.

Emergency savings

You can’t build wealth overnight.

A good first goal is a savings account for emergencies.

Auto-pilot savings

Set up automatic deposits to a savings account.

Easy money

Money that is easily available is said to be liquid.

Setting goals

Financial goals are personal benchmarks that you set for yourself throughout life. Long term goals Short term goals

Dream Your Goals

This activity will help you put an approximate price tag on your financial goals.

Savings accounts

Savings accounts are accounts at financial institutions designed to keep your money safe and help it grow.

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.

Two kinds of interest

Simple

Compound

Opening an account

Shop around for good terms

You will need identification (ID)

Initial deposit

Individual development accounts (IDAs) are special sponsored savings accounts for low income families.

Most IDAs match what you save.

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

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

Risks and rewards

As the possibility of profit goes higher, so does the risk that you might lose your money.

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.

Mutual funds

Each investor in a fund shares in the fund’s gains, losses and expenses.

Uninsured investments

The fact that you purchase an investment from your bank does not mean that your investment is government-insured.

Stock market risk

There is no guarantee that stock prices will go up or that you will make money on stocks.

CD, or Time Deposits

Certificates of deposit (CDs) are a safe way to make your money grow.

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.

Avoid ‘callable’ CDs

These are a good deal for the bank and a bad deal for you.

U.S. Treasury Investments

Include Savings Bonds and Treasury Bills.

U.S. Savings Bonds

Interest can vary, but you are always guaranteed a minimum return.

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.

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.

IRAs for retirement savings

Individual retirement accounts(IRAs) are savings accounts designed to help people put away money for their retirement.

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.

Traditional IRAs

In 2003, most taxpayers were allowed to set aside up to $3,000 in an IRA.

People over age 50 could deposit $3,500 per year.

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.

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.

Saving for education

There are a number of special accounts that can help you save for your children’s college educations.

Savings Slogan Activity

Make your slogan– No more than 15 words.– Inspirational.– Persuasive to people of all ages

and all walks of life.

Questions and Answers

We have reserved some time to answer your questions.

Please put your hand up if you have a question.

Congratulations!

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

Your feedback

Please fill out the Seminar Evaluation Form and leave it on your way out.

MoneyWi$e: Saving to Build Wealth Saving to Build Wealth MoneyWi$e A joint financial education...

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