Tools and Strategies for Life’s Financial Decisions

Presented By: Brian H. Grant, CLU, ChFC, MSFS

Certified Financial Planner ™ President

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Hypothetical Case Study



Maxine T., MD



26 years old



Single, female



Second-year, Rheumatology Resident



Annual income $38,000

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Wealth Creation Foundation Stones



Develop a budget – control spending



Have an emergency fund



Investing vs paying off loans

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Managing Debt

How much debt is too much?

Debt to income ratio worksheet

Scoring If your debt to income ratio is: Less than 30%: Excellent 30% to 36%: Good

below 30% but work to get it

36% to 40%: Borderline

. Will struggle to pay

40% or higher: Red Flag

. Problems ahead.

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Do worksheet case

Monthly Debt Payments

Monthly Mortgage Payment or Rent (Insurance and Taxes Included) Monthly Home Equity Line of Credit or Loan Payment Monthly Car Payment Monthly Revolving Credit Payments (Furniture, Appliance Loans, ect.) Monthly Student Loan Payments Monthly Minimum Credit Card Payment X2 Other Monthly Loan Amounts Monthly Child Support Payments Monthly Total Debt Payments

Monthly Income

Monthly Net (Take Home) Pay. Add back retirement contributions Annual Bonuses and Overtime ÷ 12 Other Annual Income ÷ 12

Total Monthly Income

$ $ $ $ $ $ $ $ $ $ $ $ $

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Wealth Creation The Power of Time Age started Age ended Rate of return * Contributions Total Contributed At age 65 CINDY 22 27 12% 5 x $2,000 $10,000 $1,311,900 TOMMY 27 65 12% 39 x $2,000 $78,000 $1,219,661 Start Saving for Retirement TODAY!

*

These are hypothetical examples and are not intended to portray the results of any particular investment.

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Wealth Creation Impact of taxes



Increasing value of a penny



Qualified retirement plans



The Roth IRA opportunity



Tax deferred strategies - annuities & mutual funds

* Early withdrawals may be subject to a surrender charge. In addition, distributions prior to age 59 ½ may be subject to a 10% tax penalty.

** Tax free income is achieved by withdrawing from the policy cash value an amount equal to the total premiums paid (cost basis), then using policy loans for the balance. Outstanding policy loans at death, and withdrawals, will reduce the policy death benefit and cash values. If the policy is allowed to lapse with a loan outstanding, the amount of the loan in excess of your cost basis will be taxable as ordinary income to the extent of the gain in the policy and may be subject to a 10% income tax penalty prior to age 59 ½.

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The Power of Tax Deferral

Tax deferral means you don’t reduce your investment by income taxes during accumulation.

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What is a Mutual Fund?

FUND

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Variety of Mutual Funds

Lower Risk Higher Risk Aggressive Growth International Growth & Income Balance Fixed Income Money Market Higher Potential Return Lower Potential Return

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Why Invest in a Mutual Fund?



Diversification and stability



Collective buying power



Professional management



Convenience

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Investment Strategies



Maintain long holding periods



Diversify

–

Asset allocation



Dollar cost averaging

–

Purchase more in down markets; less in higher markets

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Wealth Creation

The Importance of Risk Management

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Disability Insurance



Insure the goose or the eggs?



Ensure your future insurability



“Own Occupation” definition



Cost of living rider



Residual Benefit Rider



Non-cancelable policy

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Power of Life Insurance



Tax deferred growth



Tax free retirement income



Income tax free death benefit * Tax free retirement income is provided by first withdrawing premiums you have paid then taking any additional funds by using policy loans. Under current law, policy loans are income tax free provided this policy remains in force and is not a modified endorsement contract as defined by IRC7702A. If the policy is allowed to lapse with a loan outstanding the amount in excess of your cost basis will be taxable. Policy withdrawals or outstanding loans will reduce the cash value and death benefit to your beneficiaries.

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Life Insurance

The need and why…



Five primary reasons Income replacement Final expenses Covering debt New asset class Giving to charity

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Life Insurance



Four Types

–

Whole life

–

Term

–

Universal life

–

Variable universal life

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Life Insurance

What is the best type?

How much?

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Education Planning

529 Plans Coverdell Education Savings accounts Comparing Plans

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Financial Calculators

Available on our website: Premierfinancialgroup.com



Savings



Taxes



Loans and mortgages



Business



Auto



Insurance

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Premier Financial Group, Inc.

119 S. Easton Road P. O. Box 489 Glenside, PA 19038-0489 (215) 887-4750 E-mail: [email protected]

Member National Financial Partners Visit our websites: Premierfinancialgroup.com

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