Transcript Faith, Finance &You – Bringing It All Together

Investing and
Saving
Making it
work for you
Personal Finance Workshops
A. Budgeting and Debt
Reduction
B. Saving and Investing
C. Personal Financial
Management
D. Stewardship
E. Charitable Giving
Our mission today
• Rent vs own
• Growing my money
• Types of funds
• Where to go for help
The wise man saves for the future but the foolish
man spends whatever he gets.” Proverbs 21:20
Define terms
• Savings
• Investments
• Trading
Savings, Investments, Trading
What’s the difference?
Interest – Rent
Capital Gains – Buy/Own
X
X
X
X
Usually guaranteed
interest and time period
Risk and volatility
This graphic is conceptual only
Risk Tolerance
Picture Source: http://images.google.ca/imgres?imgurl=http://confluence.engin.umich.edu/download/attachments/3958/
Volatility vs. Risk
• What is YOUR comfort with risk?
• Select investments you will feel
comfortable with
• Stops “pulling out” of existing
investments
• Properly plan based on your individual
comfort and needs
• Allows you to sleep at night
Income Tax Treatment
What is my:
– effective tax rate?
– marginal tax rate?
Are all investments taxed the same?
– Interest
– Capital gains
– Capital losses
Income tax advantaged strategies
• RSP
– Spousal RSP
– New home buyer
– RRIF
• RESP
• TFSA
Interest
• What is Compound
interest?
• Rule of 72
– 72 divided by interest
rate earned
Rule of 72
Assume age 21 and you save $1,000 per year
Age Interest at 6%
Age Interest at 9%
21
33
45
57
69
21
29
37
45
53
61
69
$ 1,000
$ 2,000
$ 4,000
$ 8,000
$16,000
$ 1,000
$ 2,000
$ 4,000
$ 8,000
$16,000
$32,000
$64,000
Investment Funds
Compare investment funds vs interest payments
TSE 300 Index
Rate of return
Avg rate 10-12%
1970
GIC 5 yr interest
Avg rate 7-8%
This graphic is conceptual only
1990
Compare to present: GIC avg 4-5%, TSX avg 10-12%
What is an investment fund?
• Define
• History
• Prospectus
Dollar Cost Averaging
Option 1: $1,000 @
$10 per unit = 100
units
Option 2: invest
$100 per month
over a 10 month
period
This graphic is conceptual only
Do not put all your eggs in one basket
= Diversification
Diversification vs Diffusion
This graphic is conceptual only
Types of products and funds
Interest
– GICs
– Annuities
– Bonds
Funds
– Income
– Balanced
– Equity
Fund Managers
• Top down
• Bottom up
Mutual Funds / Segregated Funds
•
•
•
•
•
•
Provided by
Guarantees
Your estate
Creditor protection
Beneficiary
Costs…..
Costs
• Loads
– Front end
– Back end / DSC
– No load
• Management Fees
Remember
1. Stay Invested – Don’t panic
2. The Power of Compounding/Rule of 72
3. Dollar Cost Averaging – Invest regularly
and Do not time the market
“The way of a fool is right in his own eyes,
but a wise man is he who listens to
counsel”
Proverbs 12:15
Want to go deeper?
To review or start your plan
– consider FaithLife Financial
Go Green - www.faithlifefinancial.ca
– download financial tools
– view seminars
– calculators
– great financial articles