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Investing and Saving

Investing and Saving. Making it work for you. Personal Finance Workshops. Budgeting and Debt Reduction Saving and Investing Personal Financial Management Stewardship Charitable Giving. Our mission today. Rent vs own Growing my money Types of funds Where to go for help.

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Investing and Saving

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  1. Investing and Saving Making it work for you

  2. Personal Finance Workshops • Budgeting and Debt Reduction • Saving and Investing • Personal Financial Management • Stewardship • Charitable Giving

  3. Our mission today • Rent vs own • Growing my money • Types of funds • Where to go for help The wise mansavesfor the future but the foolish man spends whatever he gets.” Proverbs 21:20

  4. Define terms • Savings • Investments • Trading

  5. 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

  6. Risk Tolerance Picture Source: http://images.google.ca/imgres?imgurl=http://confluence.engin.umich.edu/download/attachments/3958/

  7. 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

  8. Income Tax Treatment What is my: • effective tax rate? • marginal tax rate? Are all investments taxed the same? • Interest • Capital gains • Capital losses

  9. Income tax advantaged strategies • RSP • Spousal RSP • New home buyer • RRIF • RESP • TFSA

  10. Interest • What is Compound interest? • Rule of 72 • 72 divided by interest rate earned

  11. Rule of 72 Assume age 21 and you save $1,000 per year Age Interest at 6% Age Interest at 9% 21 $ 1,000 21 $ 1,000 33 $ 2,000 29 $ 2,000 45 $ 4,000 37 $ 4,000 57 $ 8,000 45 $ 8,000 69 $16,000 53 $16,000 61 $32,000 69 $64,000

  12. Rate of return 1970 1990 Investment Funds TSE 300 Index Avg rate 10-12% Compare investment funds vs interest payments GIC 5 yr interest Avg rate 7-8% This graphic is conceptual only Compare to present: GIC avg 4-5%, TSX avg 10-12%

  13. What is an investment fund? • Define • History • Prospectus

  14. 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

  15. Do not put all your eggs in one basket = Diversification

  16. Diversification vs Diffusion This graphic is conceptual only

  17. Types of products and funds Interest • GICs • Annuities • Bonds Funds • Income • Balanced • Equity

  18. Fund Managers • Top down • Bottom up

  19. Mutual Funds / Segregated Funds • Provided by • Guarantees • Your estate • Creditor protection • Beneficiary • Costs…..

  20. Costs • Loads • Front end • Back end / DSC • No load • Management Fees

  21. Remember • Stay Invested – Don’t panic • The Power of Compounding/Rule of 72 • 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

  22. 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

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