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Financial FactsCatalogue code: B07

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Slide numbers: B07-1 to B07-28

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Last update info:Date updated: 2014-12-31Project #25321Description of changes: updated slides B07-18, B07-23.

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Financial Facts Basic Concepts You Need to Know

B07-1

You won’t work forever.

FINANCIAL FACTS

Financial planners suggest you will need to replace 70–90% of your annual income when you retire.

On average, Social Security was designed to only replace 25–40% of your income.

You may live one-third of your life in retirement.

1Fact

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Source: CIA — the World Fact BookB07-3

Longer Lifespan

1946 — age 672014 — age 78

11 years longer

The earlier you save, the better.

FINANCIAL FACTS

Compound return — the return on your original investment, plus the return on your previous earnings — can make a huge difference in your retirement account balance over time.

2Fact

B07-4

Compound Return

Original investment:$100

Invested for one year withan 8% return adding $8 fora total of: $108

Invested for another yearwith an 8% return addingaround $9 for a total of:$117

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FINANCIAL FACTS

Retirement Plan Contributions

Invest $100 per month beginning at age:

When you retire at age 65,

you have:*

25 $349,101

30 $229,338

35 $149,012

40 $95,103

45 $58,896

50 $34,604

55 $18,295

60 $7,348

B07-6

*Accounts in this column are based on an 8% annual investment return in a tax-deferred retirement plan. Your return   may be more or less. Note that the funds will be subject to income tax when you receive your distribution(s).

FINANCIAL FACTS

To Accumulate $100,000 by Age 65

FINANCIAL FACTS

Age 50

Monthly contribution $290

Total contributions $52,200

Total return $47,800

Total accumulation $100,000

B07-7

Based on 8% annual earnings.This is an illustration to show the concept of compound return and is not intended to imply the past or future performance.

To Accumulate $100,000 by Age 65

FINANCIAL FACTS

Age 50 Age 40

Monthly contribution $290 $105

Total contributions $52,200 $31,500

Total return $47,800 $68,500

Total accumulation $100,000 $100,000

B07-8

Based on 8% annual earnings.This is an illustration to show the concept of compound return and is not intended to imply the past or future performance.

To Accumulate $100,000 by Age 65

FINANCIAL FACTS

Age 50 Age 40 Age 30

Monthly contribution $290 $105 $44

Total contributions $52,200 $31,500 $18,480

Total return $47,800 $68,500 $81,520

Total accumulation $100,000 $100,000 $100,000

B07-9

Based on 8% annual earnings.This is an illustration to show the concept of compound return and is not intended to imply the past or future performance.

Yes, you have money to invest.

FINANCIAL FACTS

Monitor your spending for one month. Determine where your money is going

and where you can economize. Start with 1% and increase it 1% each

time you get a raise.

3Fact

B07-10

Finding Extra Money Lower your tax

withholding through your employer.

Check fees and interest rates on all credit cards (these can be negotiated).

Consider consolidating credit card debt to a low- interest loan.

Average your utility bills.

B07-11

FINANCIAL FACTS

Utilize all “pre-tax” programs offered by your employer.

Watch ATM and checking account fees.

Raise deductibles on insurance.

Consider refinancingyour home or car if market interest rates are 1½% lower than what you are paying.

A percentage is better than a “fixed dollar” amount.

Monthly salary = $2,000 $100 monthly “fixed” investment (5%)Five years later with 3% annual raises:Monthly salary = $2,318$100 monthly “fixed” investment (4.3%)

4Fact

B07-12

FINANCIAL FACTS

A “Fixed Dollar” Contribution

Remains flat when your salary increases

Does not keep pace with inflation

Makes it impossible to maintain your standard of living when you retire

B07-13

FINANCIAL FACTS

Your investment choice is important.

FINANCIAL FACTS

“Owned” investment Shares of American and

international companies Volatile returns with

increased risk Historically, equities

have a higher potential for long-term return

Fixed Income Assets (Bonds)

Equity Assets (Stocks)

5Fact

B07-14

“Loaned” investment Bonds, money market

instruments, Treasury notes, etc.

Less volatile returns with reduced risk

Historically, fixed-income assets have less potential risk and lower potential returns than equity assets

Which type of investment is right for you?

FINANCIAL FACTS

Time horizon Risk tolerance Diversification

B07-15

Series172%

28%

Series190%

10%

Series193%

7%

Stock Performance from 1930–2010

FINANCIAL FACTS

Percentage of time stocks had positive returns, 1930–2010

1 Year Periods 5 Year Periods 10 Year Periods 20 Year Periods

B07-16

Positive Returns Negative Returns

Source: Ibbotson AssociatesWhile past performance is no guarantee of future performance, the market itself has been resilient through the years.Illustration based on S&P 500 Index from 1/1/1930 to 12/31/2010.

100%

Asset Allocation matters.

FINANCIAL FACTS

Return on investment — the rate at which your investment grows as a result of earnings.

Higher return usually means greater risk. A small difference in a rate of return can

make a big difference in the size of your investment over time.

6Fact

B07-17

A little risk can be a good thing.

FINANCIAL FACTS

Invests $250/month 8% average return

for 35 years Investment total:

$574,000

This hypothetical illustration is not intended to represent or predict the return on an actual investment.

Conservative Portfolio Aggressive Portfolio

B07-18

Invests $250/month 6% average return

for 35 years Investment total:

$356,000

Free money is a big deal.

FINANCIAL FACTS

If matching contributions are offered, you should always try to take advantage of them.

7Fact

B07-19

Debt can derail your plan.

FINANCIAL FACTS

Paying off debt Checking your credit record

8Fact

B07-20

Dealing with Debt

FINANCIAL FACTS

Avoid the minimum payment trap

Assumes $5,000 debt, 16% interest, no additional chargesSource: Bankrate.com

Monthly Payment Total Paid Years to Pay

Off

Minimum $7,431 12

$200 fixed $6,123 2.6

$225 fixed $5,970 2.25

$250 fixed $5,854 2

B07-21

Using Debt Wisely

FINANCIAL FACTS

B07-22

Importance of your credit history

Obtaining your credit report• www.annualcreditreport.co

m• Call 1-877-322-8228

Correcting mistakes in your credit report

You can’t time the market.

FINANCIAL FACTS

Market timing — trying to move out of an investment when you think it is about to lose value or move into an investment just as you think it is about to grow in value.

9Fact

B07-23

Missing the Best Days in the Market — 1990–2010

FINANCIAL FACTS

B07-24

Market Returns: S&P 500 Index from 1990–2010

Sources: FactSet, Standard & Poor’s as of 12/31/2010

Stayed fully invested all 5,295 days

Missed 10 best days

Missed 20best days

0% 2% 4% 6% 8% 10%

8.97%

5.25%

2.82%

0.76%Missed 30 best days

You’re in it for the long haul.

FINANCIAL FACTS

Dollar cost averaging — Investing the same amount of money at regular intervals over a long period of time resulting in a lower average cost per share.

10Fact

B07-25

Be a long-term investor.

FINANCIAL FACTS

Be aware of the ups and downs

Remember your objectives

B07-26

Stuff to Do

FINANCIAL FACTS

Figure out where you can find more money in your budget

Invest a percentage of your income• Join the 1% Club

Check your portfolio allocation• Consider GuideStone’s three

approaches to investing Deal with your debt Use GPS: Guided Planning Services®

*

Financial advice provided by GuideStone Advisors, a controlled-affiliate of GuideStone Financial Resources.

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