Money 101Your Circle of Wealth

Fact not speculation

Choice not chance

Material discussed is meant for general illustration and /or information purposes only and it is to be construed as tax, legal or investment advise. Although the information has been gathered from sources believed reliable, please note that individual situations can vary, therefore the information should be relied upon when coordinated with individual professional advice

Food for thought & Money in your pocket

• What if . . . you found out that what you knew to be true about your money was not true. . .

• When would you want to know?

• Know all your options!• Knowledge is power!

Money Facts

1. Minimum risk safety /security

2. Minimum tax more for me you have a “silent” Partner called the tax Man

3. Competitive rate of return

There are 3 Family / Self Guarantees

1. Providing for your family in the event of pre-mature death

2. Providing for yourself & family should you not be able to earn your paycheck- accident-illness-injury (2 job offers)

3. Maintaining / improving your lifestyle throughout your entire life

. . . In other words not outliving your money

Income Replacement plan to maintain your lifestyle What if due to an injury, illness or accident you cannot work?

Job APays $60,000annually

PaysNO income to• Family• Business• Children

Job BPays $57,980annually

Pays67% or $40,200 annuallyAt age 65 to you . . .for yourself

• Family• Business• Children

Gives you & your money . . .L U C

1. Liquidity

* accessibility – when you want

2. Use

* the way you want

3. Control

* without any 3rd party involved

There are 2 groups of people

spenders savers

The first group of people generally ends up working for the second group

Your . . . Circle of WealthHas only 3 types of money

accumulated

lifestyle

transferred

Transferred Money We do this unknowingly & unnecessarily

1. Taxes (see tax history) 6. Insurances2. Tax Refunds 7. Disability3. Qualified pension 8. Financing plans

automobiles4. Mortgages 9. Credit

Cards5. Financial plans 10. Investments

$10,000.00 Loan ?

If you needed a loan for $10,000.00.What 2 questions would you ask the lender?1. What is the Interest rate?2. How long do I have to pay it back?The lender replies,

“Take 10, 20 years or longer. Don’t worry about it.”“As for the interest rate, we’ll let you know when you

are ready to pay it back. It depends on ourfinancial situation at the time. Enjoy!”

Would you take this loan?

Lost Opportunity Cost - LOC

What is Opportunity cost?For every dollar you acquire, you may chose to spend it or

save/invest it. Saved/Invested dollars can grow over time.Spent dollars are gone forever. The potential future valueof spent dollars is called opportunity cost.

•Do you earn interest on an expense?•Is the expense (money spent) accessible?•What would the money spent be worth at some future date if you had been able to save/invest it?•That is opportunity cost. (see wedding example)

Lost Opportunity Cost-LOC’sthe wedding

First you must know the mathematical rule known as . . . Rule of 72

Mathematical rule- Rule of 72 . . . Approximate time for money to doubleDivide the interest rate into 72.Example . . . $100.00 @ an interest rate of 8% will grow to $199.90 in 9 years ( 72 / 8 = 9)

LOC example . . . Let’s use the cost of a wedding•Bride and groom 25 years old•Wedding costs $20,000.00•Using and interest rate of 10% & the Rule of 72, the $20,000.00 would double every 7.2 years {72 / 10 = 7.2} Look at how $20,000.00 would grow over the couple’s Lifetime

Wedding TableAge at

10%Earnig Rate

Values Age at

7.2% Earning rate

25 $20,000.00 25

32.5 $40,000.00 35

39.4 $80,000.00 45

46.6 $160,000.00 55

53.8 $320,000.00 65

61 $640,000.00 75

68.2 1,280,000.00 85

•If the $20,000.00 could have grown to $1,280,000.00 the LOC would be the difference between the $20,000.00 spent and the $1,280,000.00 it grew to or $1,260,000.00•The $20,000.00 would have created a substantial amount of wealth had it not been spent1.28 million worth of wealth

Question? If I would offer you now $1,000,000.00 Or a penny doubled in 30 days what would you take?

• How the idea began?• Most of us have heard the idea of starting with a penny, double the amount everyday,

and eventually you will end up with $1,000,000+. I first heard about this in math class way back in grade school. For those that have never of it, this is how it works.

• Day 1 - Start with $0.01Day 2 - $0.02 (doubled)Day 3 - $0.04 (doubled)...Day 26 - $335,544.32 (doubled)Day 27 - $671,088.64 (doubled)Day 28 - $1,342,177.20 (doubled)

• Day 29 - $2,684,354.40 (doubled)• Day 30 - $5,368,708.80 (doubled)

If you chose a penny Doubled then you are correct.

Velocity of Money• The multiple uses of $1.00 of each dollar• The ability to use the same dollar over & over again• Would you rather have 3 X 3 or 3 + 3? Is 9 more than 6?

Banks, investments & insurance companies not only use thisstrategy every day but would not grow & prosper without this criticalelement & “movement” money. So how does it work?John takes out a mortgage with the bank & starts to pay back $1,000.00monthly for his home. Tom wants an auto loan. The banks takes John’smortgage payments & loans them out to Tom. The bank now takes John & Tom’smonthly payments & loans them out to you through one of their many alluring credit card programs. The bank now takes John’s home payment, Tom’s auto payment, your credit card payment & loans it out to. . . Now multiply this strategy times 1,000’s.

What a business!

Safe & Secure or Risk & SpeculationBuilding on a “Cornerstone”

Deposit $10,000.00 for 10 yearsHypothetical rate of return

5.00% $10,500.00 5.00% $10,500.00

8.50% $11,393.00 5.00% $11,025.00

7.50% $12,247.00 5.00% $11,576.00

8.00% $13,247.00 5.00% $12,155.00

-4.00% $12,698.00 5.00% $12,763.00

-10.00% $11,428.00 5.00% $13,401.00

11.00% $12,685.00 5.00% $14,071.00

7.25% $13,605.00 5.00% $14,775.00

7.00% $14,557.00 5.00% $15,513.00

6.50% $15,503.00 5.00% $16,289.00

History of Federal Individual Tax Rates

0

10

20

30

40

50

60

70

80

90

100

0

0.2

0.4

0.6

0.8

1

1.2

Line 1

Line 3

Line 4

Line 2

Top

tax

rat

e

Transferred Moneywhat if you could . . .

Annual Income $60,000.00

Annual savings $3,000.00

ROR on Savings 6.00%

Interest on Savings $180.00

Annual Expenses $57,000.00

Reducing Expenses by this percent

Saves in Dollars Return equivalent on $3,000 invested

Which can be proved by the fact that:

Proof

1.00% $570.00 19.00% 19.00% of 3,000 is $570

This savings represents a 19.00% increase on savings Guaranteed without market riskThat goes into your annual savings

Summary

• What if . . .

• 3 characteristics of every dollar save/invested

• Job “A” or “B” ?

• 3 guarantees – family & self

• LUC – Liquidity * Use * Control

• 2 kinds of people – spend 1st or save 1st . . . Who wins?

• 3 kinds of money – lifestyle * accumulated * transferred

• $10,000.00 loan

• LOC – Lost Opportunity Cost . . . Wedding or not?

• Velocity of Money or the Multiple Uses of a Dollar

• Safety & Security vs. Risk & Speculation – Building on a “Cornerstone”

• Tax history – IRS “Partner” for life

• Transferred money – what if you could recoup just 1%

You have a choice today . . .

Be proactive or be passive

It is your time, your money, your future . . . What is your plan?

The Cost of ProcrastinationCan Be Very High

Time Really is “Money”

An insurance agent receive a phone call from and excited woman>

“I want to insure my house, “she said. “Can I do it by phone?”

He replied, “No, I’m sorry. I must see it first to be sure to set up the proper plan and the right coverage.”

The woman replied, “Okay, but you better get here right away!” exclaimed the woman,

“Because it is on fire!”

Take the Time

Make the Time

Want Change? Improvement?

Want a sigh of relief

Peace of mind/ opportunities

Time is ticking away!!

I didn’t know

I wish I’d Known

It’s time to know

Thank you for your TimeLooking forward to working with you soon

Douglas R. Ness

The Advisory Group

8113 Avalon Dr.

Weymouth, MA 02188

Direct phone # 781-803-3093

Cell phone # 781-844-8952

Email dness68772@aol.com