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Long Term Saving

Avatar for Keroy King Keroy King
November 07, 2014
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Long Term Saving

Long term savings, savings budgeting

Avatar for Keroy King

Keroy King

November 07, 2014
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  2. www.lifethenfinance.com The longer you have for saving up, the less

    money you need to allocate each month toward your goal.
  3. www.lifethenfinance.com The Power of Compound Interest •  if you begin

    saving $100 a month at age 21 and earned 8 percent interest, by 65 your account would be worth about $447,000.
  4. www.lifethenfinance.com The Power of Compound Interest: Cont.... •  Increasing the

    monthly contribution to $200 would double that to about $893,000
  5. www.lifethenfinance.com •  Because of the power of compound interest, it`s

    to your advantage to start your long term savings as early as possible!
  6. www.lifethenfinance.com Saving for College – Strategies •  Start early –

    Begin an account for your child in their first year. •  Assemble a team – Try to get relatives involved. They can give college money as gifts for Christmas or birthdays. Tip: Let your child pitch in as well.
  7. www.lifethenfinance.com Saving for College - Strategies •  Seek security plus

    a higher interest rate. •  Online banks tend to have higher interest rates. •  Look into using mutual funds and other investments. Warning: As the interest rate rises, so does the risk!
  8. www.lifethenfinance.com Scholarships •  Offered on an academic or athletic basis

    •  Some cover the entire tuition but most only cover a portion of the bill. •  You don`t have to pay them back! Tip: Take advantage of your college’s financial aid office!
  9. www.lifethenfinance.com Saving for Retirement Consider investment options that provide a

    better rate of return on your funds than your checking or savings account at your bank.
  10. www.lifethenfinance.com IRA`s •  Retirement accounts you can open at your

    bank •  They allow you to create a portfolio of stocks, bonds, and mutual funds •  Two types: Traditional and Roth IRA`s
  11. www.lifethenfinance.com Traditional IRA`s •  You can fund your IRA with

    cash or cash equivalents. •  You pay no income tax on the money you deposit into your IRA. Warning: Taking money out of an IRA before you hit age 70 will incur penalties.
  12. www.lifethenfinance.com Roth IRA`s •  Not tax deductible •  Fewer penalties

    for taking money out •  Deposit limit: $5,000 per year($6,000 if you`re over age 50)
  13. www.lifethenfinance.com Roth IRA`s •  If you have a Roth and

    Traditional IRA, the deposit limit applies to both accounts combined. o  The limit is still $5000 or $6,000. It doesn`t double just because you have two accounts.
  14. www.lifethenfinance.com 401(K) •  Processed through your employer •  Annual deposit

    limit: $16,500 •  Any contributions will not be taxed until you withdraw the money
  15. www.lifethenfinance.com 401(K) •  Earnings made from the 401(k) are tax

    deferred until the money is withdrawn. •  Withdrawing money before you reach the minimum age (60) will result in penalties. •  Some employers match a percentage of your contribution
  16. www.lifethenfinance.com Retirement Funding in Canada •  Tax Free Savings Account

    •  You can withdraw money at any time without tax penalties. Tip: While the deposits aren’t tax deductible, money made from that account isn’t taxed.
  17. www.lifethenfinance.com Retirement Funding in Canada •  Registered Retirement Savings Plan

    •  Much closer to USA`s Traditional IRA •  The deposit limit is much higher than IRA`s in the USA
  18. www.lifethenfinance.com Retirement Funding in Canada Your Registered Retirement Savings Plan

    doubles as a 401(k), as employers can put money from your paycheck straight into the account.
  19. www.lifethenfinance.com IRA`s in the United Kingdom •  Individual Savings Account

    (ISA) •  Divided into two components – Cash and Stock shares. •  It's possible to transfer funds from the cash to the stocks component, but not the other way around.
  20. www.lifethenfinance.com Other Countries •  The term 401(K) does not mean

    much in other countries, since it refers to a US law. •  However, other countries have similarly functioning accounts. •  The term has become common enough that these accounts are sometimes referred to as 401(k)`s.
  21. www.lifethenfinance.com Self-Reflection Questions: •  What financial goal is needed to

    retire comfortably? •  Does my employer match 401(k) contributions? •  What type of retirement savings account best suits my needs?
  22. www.lifethenfinance.com Action Tips: •  Start saving now to allow earnings

    to compound and accumulate to a greater extent. •  If your employer matches 401(k) contributions, add the maximum percentage that your employer will match to ensure you get as much of a return as possible. •  If you put money into an IRA or 401(k), leave it there; taking it out results in penalties and fees.
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