1. Part Three: Investing and Growth
Lets Talk Money!
Part Three: Investing and Growth

2. Week 1 Recap Financial Principles Budget Goals (50/20/10/20)
Plan (Luke 14:28-30)
Protect/Stewardship (Proverbs 27:23)
Provide (1 Timothy 5:8)
Budget Goals (50/20/10/20)
Income ≥ Expenses
Reduce/Eliminate Debt
Increase Savings
Include Dreams

3. Week 2 Recap Debt Reduce Debt Lender = Master, Debtor = Slave
Debt payments reduce buying power
Debt causes missed opportunities
Debt kills/stalls dreams
Reduce Debt
Snowball Method
Understand the impact to the big picture

4. Week 2 Recap Savings Vehicles How to Save Savings Account
Money Market Account
Bank CDs
How to Save
Start with a $1000 EMERGENCY fund
Out of Sight/Out of Mind- Automate savings
“Compound interest is the eighth wonder of the world. He who understands it, earns it… He who doesn’t, pays it.” – Albert Einstein

5. Investing vs. Saving Investing occurs after saving
Invest for the longer term > 10 years
Education/Retirement/Legacy
Protects buying power
Average inflation = 3%
$100 today = $97 next year
Stock Market has averaged +10%/yr over last 40 years
Increased returns come with increased risks
In 2008 the stock market lost 37%

6. Investing
Start Early: Time is an asset

7. Investing Stocks A share of ownership in a company
Bought and sold on a stock exchange
NYSE; Nasdaq
Typically bought through a brokerage account
ETrade, Fidelity, TD Ameritrade, Schwab, etc.
Prices based on the growth and profitability of a company as well as supply/demand

8. Investing Bonds (IOU issued by an organization)
Interest(Coupon) Rate
Set at the time of issue (higher rate=higher risk)
Represented by a % paid on face value
Face Value
Amount that will be paid back at maturity
Maturity Date- Date when face value is paid
Issue Price- Price that the bond is sold
Lock in higher rates with longer terms

9. Investing Mutual Funds
Pool of money from investors that a company uses to buy and sell stock or bonds. Typical in a specific category.
Actively managed by a professionals, which incurs management fees.
Investment minimums typically apply, and vary.
Price set at the end of each trading day.
Vanguard; American Funds; Blackrock

10. Investing Exchange Traded Funds (ETFs)
Pool of money from investors that a company uses to buy and sell stock or bonds. Typical in a specific category.
Passively managed by a professionals, which incurs smaller management fees.
Bought and sold like stocks, minimum investment equal to the share price.
Share price changes throughout trading day.
SPDR; iShares; Vanguard

11. Investing
STOCKS
STOCKS
BONDS
BONDS
Mutual Funds
ETFs

12. Investing Employer Sponsored Retirement Account 401(k)/403(b)/457
Pre tax contributions (withdrawals taxed as income)
$19K/yr max, additional $6k/yr for 50+
10% early withdrawal penalty + taxes
ALWAYS get the match
retirement-plans/

13. Investing Individual Sponsored Retirement Account (IRA) Traditional
Tax deductibility based on income
No contributions after 70.5 yrs old
Contributions limited to $5500, or $6500 for 50+
Roth
No tax deductibility, but withdrawals untaxed
No withdrawal penalties
Contributions allowed after 70

14. Investing Brokerage Account Research Start Small Use “excess” funds
Be careful of commissions; commission < 5% of trade
Research
Build a watch list
Big rewards come with big risks
Be careful of unreliable sources

15. College (529 Plan)
Virginia 529 Plan- Tax free savings plan used to pay for education expenses.
Beneficiary can be changed without penalty
10% penalty for non-education expenses
Contributions can be gifted
Consists of 2 options:
Invest529
CollegeAmerica

16. College (529 Plan)
6.5% Avg.
Return

17. College (529 Plan)
Invest 529 Plan- Direct-sold plan with access to several mutual funds.
$250 min. to open, and no per month min.
Target date fund options
Select closes date of graduation
Automatically adjust risk based on date
15 other funds available
Must be used 30 years after beneficiary graduates

18. College (529 Plan)
CollegeAmerica Plan- Advisor-sold plan with access to several mutual funds.
$250 min. to open, and $50 per month
Target date fund options
Select closes date of graduation
Automatically adjust risk based on date
American Funds mutual funds also available
Must be used 30 years after beneficiary graduates

19. Real Estate Investing Core Investment Growth
Purchase Price is Critical
Be patient and do your research
Monthly Cash Returns
1% rule
$200k X 1% = $2k/month rental price
Mortgage (20% dwn) for $200k = $1k/mth
Core Investment Growth
Neighborhood/Repairs/Rental Pool

20. Real Estate Investing Start with Current Home
Quality of home is known.
Instant equity from payments
Won’t require 20% down
Remaining loan balance will count in Debt/Income ratio <40%-45%
May hinder upgrade potential

21. Real Estate Investing Start with New Home Expect unforeseen repairs.
After purchase, home may need to be brought up to code.
Most secondary mortgages require 20% down
Remaining loan balance will count in Debt/Income ratio <40%-45%
Home can be “less than ideal”

22. Homework Start a Budget (50/20/10/20) Stick to the Budget
Start Saving- $1000 Emergency Fund
Increase Tithing- Commit to auto giving
No New Debt
Reduce Debt
Avoid Lifestyle Inflation
Invest for the Future

23. Resources https://www.daveramsey.com/
The Millionaire Next Door by Thomas Stanley
The Total Money Makeover by Dave Ramsey
Rich Dad Poor Dad by Robert Kiyosaki
The Holy Bible, especially the book of Proverbs