1. Welcome

2. Workshop Objectives Introduce Introduce Educate Educate Illustrate Illustrate

3. Our Commitment Provide sound financial information Provide sound financial information Help you identify goals Help you identify goals Offer complimentary consultation Offer complimentary consultation

4. Evaluation Form

5. About Your Workbook Informative graphics Informative graphics Wide margins Wide margins Helpful exercises Helpful exercises 4

6. Your Financial Future Lifetime Earnings $40,000$70,000$100,000 per yearper yearper year 10 years$480,244$840,427$1,200,611 20 years$1,191,123$2,084,466$2,977,808 30 years$2,243,398$3,925,946$5,608,494 Assumes a 4% annual salary increase

7. Your Financial Future Overcome obstacles to success Overcome obstacles to success Practice sound financial management Practice sound financial management

8. Lack of Direction

9. Debt Credit Card \ kred’- t kärd \ n.: 1. A means for buying some- thing you don’t need, at a price you can’t afford, with money you don’t have. e

10. Inflation

11. The Rule of 72 72 Inflation Rate 6% Inflation 72 ÷ 6 = 12 years 4% Inflation 72 ÷ 4 = 18 years 6

12. Taxes The average person will work until late April to pay all federal, state, and local taxes. Tax Freedom Day Source: Tax Foundation

13. Yield After Taxes and Inflation Investment$ 10,000 8% interest+800 Taxes (27% tax bracket)–216 Net interest$584 Total after taxes$10,584 Adjusted for inflation (4%)  1.04 Net after taxes and inflation$10,177 Net return = 1.77% 6

14. What Is Financial Management? E N W S ESTATE PLANNING INVESTMENT PLANNING RETIREMENT PLANNING TAX PLANNING CASH MANAGEMENT RISK MANAGEMENT

15. Do I Need Financial Management? 7

16. Cash Management CASH MANAGEMENT

17. Cash Flow Total Income $ ________ Total Expenses–$ ________ Net Cash Flow=$ ________ 8

18. Liquidity Fund Savings = Liquidity Ratio Monthly Expenses

19. Reposition Assets and Liabilities

20. Risk Management RISK MANAGEMENT

21. Risk Management Life Life Disability Disability Medical and long-term care Medical and long-term care Auto Auto Home Home Liability Liability

22. Protect Yourself

23. How Do You Know If You Have Enough? 9

24. Income Replacement Calculator 1.Total income now$80,000 2.Total income available$40,000 3.Additional income needed$40,000 4.Capital required$500,000 5.Additional cash requirements$125,000 6.Life insurance needed$625,000 Mr. and Mrs. Harrick

25. Investment Planning INVESTMENT PLANNING

26. Investment Objectives Growth Safety Income

27. The Investment Spectrum CASH EQUIVALENTS FIXED INTEREST BONDS STOCKS HIGHER RISK HIGHER POTENTIAL RETURN LOWER RISK LOWER POTENTIAL RETURN

28. Diversification CASH FIXED PRINCIPAL DEBT EQUITY TANGIBLES

29. Diversification Example BILLJILL $50,000 $50,000

30. Diversification Example Bill and Jill after 20 years Bill 7%$193,485 Jill (loss)$0 5%$26,533 7%$38,697 10%$67,275 12%$96,463 Jill’s Total $228,968 Difference =$35,483 This is a hypothetical example. Actual results will vary.

31. College Planning Combined income: $48,000 One child: Robby, age 5 College cost: $10,000 Mr. and Mrs. Thompson

32. College Savings Calculator Estimated future college cost: $107,000 for 4 years Annual savings required: $5,671 a year for 13 years Mr. and Mrs. Thompson 12

33. Dollar Cost Averaging

34. PRICE PERSHARES INVESTMENTSHAREPURCHASED This is a hypothetical example. Actual results will vary. MONTH 1$ 200$10.0020 MONTH 2$ 200$8.0025 MONTH 3$ 200$5.0040 MONTH 4$ 200$8.0025 MONTH 5$ 200$10.0020 TOTAL$1,000130SHARES AVERAGE PRICE: $8.20 AVERAGE COST: $7.69

35. Tax Planning TAX PLANNING

36. Tax Strategies

37. Tax Deferral Mr. Washington 45 years old $70,000 salary $85,000 investment portfolio Interest income: $6,800 Taxes: $2,040

38. Tax Deferral Mr. Washington Taxable (30% tax bracket) Tax deferred Tax deferred after taxes 5 years10 years15 years20 years $111,619 $124,891 $145,574 $183,507 $192,476 $269,637 $252,754 $396,185 $302,827 Mortality and expense charges, sales charges, and administrative fees are not taken into account and would reduce the performance shown if they were included. $85,000 initial portfolio 8% annual rate of return

39. Tax-Free Investments Calculating the Taxable Equivalent Yield 13 EXAMPLEEXAMPLE YOU 1.Take the tax-exempt yield 7% 7%_____% 2.Your marginal federal tax rate 27% 35%_____% 3.Subtract your rate from 100% (1.00 – line 2) 73% 65%_____% 4.Taxable equivalent yield9.59%10.77%_____% (line 1 ÷ line 3)

40. Retirement Planning RETIREMENT PLANNING

41. Sources of Retirement Income Social Security Employer-sponsored plans Personal savings and investments

42. Other Retirement Planning Considerations Distribution options Tax considerations

43. Changing Jobs Ms. Martin Total distribution amount$40,000 20% withholding–$8,000 Early withdrawal penalty–$4,000 Additional income tax due–$2,800 After-tax distribution$25,200

44. Rollover Ms. Martin Tax-deferred growth @ 8% $40,000 $58,773 START51015202530 $86,357 $126,887 $186,438 $273,939 $402,506 YEARS

45. Mr. and Mrs. Tucker Retirement Distribution Annuity Single-life annuity Joint and survivor annuity

46. Mr. and Mrs. Tucker Increasing Your Pension $1,000 $1,200 $200 Surviving Spouse Death Benefit

47. Mr. and Mrs. Tucker Lump-sum distribution — $220,000 Tax alternatives Ordinary income tax$58,500 10-year averaging$42,100 Capital gains + 10-year averaging$38,300 Potential tax savings$20,200 Retirement Distribution

48. Estate Planning ESTATE PLANNING

49. John Wayne

50. Estate Planning Concerns Distribution Distribution Wills Wills Trusts Trusts Gifting Gifting Probate Probate Taxes and fees Taxes and fees

51. Reducing Estate Taxes Mr. and Mrs. Hudson Two grown children Estate value: $1,500,000 Estimated tax: $210,000

52. Reducing Estate Taxes AssetsTrust A Trust Death of Second Spouse Children B Trust Death of First Spouse Mr. and Mrs. Hudson — Estate value: $1.5 million ESTATE TAX SAVINGS: $210,000

53. Reducing Estate Taxes Mr. and Mrs. Hudson — Estate value: $2.5 million ESTATE TAX SAVINGS: $470,000 Premiums Insurance Trust Children Death Benefit Death of Second Spouse

54. Review Cash management Cash management Risk management Risk management Investment planning Investment planning Tax planning Tax planning Retirement planning Retirement planning Estate planning Estate planning

55. Financial Management Process 1.Gather information 2.Identify objectives 3.Determine present position 4.Develop strategies 5.Implement strategies 6.Review periodically 17

56. Where Do You Go from Here?

57. Do it yourself Do it yourself Work with others Work with others Work with us Work with us Procrastinate Procrastinate

58. Evaluation Form

59. What to Bring

60. Thank You