How Money Works Us
- 1. Important Note: You must be securities licensed in order to use the "Rate of Return is the Key” and “It Pays to Start Early” pages. If you do not have a valid securities license, you must remove these two pages from your presentation. If you use these two pages, you must: Identify yourself as a Registered Representative of PFS Investments Inc. Clearly state that all investments are offered through PFS Investments Inc. Provide the address and phone number of PFS Investments to all potential clients: 3120 Breckinridge Blvd. Duluth, GA 30099 (800) 544-5445 If you use these pages, you must not: Discuss any particular mutual fund or variable annuity without first giving every member of the audience a current prospectus. © 2004-2010 Primerica/ HMW/41163/9.10/V7.0/04INS47-12
- 3. How Money Works Most people are concerned about money matters, but few truly understand how money works.
- 4. Taking Control of Your Debt Pay yourself first. Adjust your priorities and establish a budget. Earn additional income. Avoid the credit trap. Re-align your assets. What You Can Do…
- 5. It Pays to Start Early Goal: $500,000 at age 65 Monthly Savings Required If your goal is to save $500,000 for retirement at age 65, look at the difference time makes. Assumes a hypothetical 10% constant rate and growth in values. Subject to applicable taxes and fees. Rate of return is a nominal interest rate compounded on a monthly basis. Actual investment will fluctuate in value. Begin at: Save: Cost to Wait: Age 25 $78 Age 35 $219 3 times more! Age 45 $653 8 times more! Age 55 $2,421 31 times more!
- 6. The Rule of 72 A simple concept called “The Rule of 72” shows the dramatic effect of time and compounding. The Rule of 72 says that your money will approximately DOUBLE at a point in time determined by dividing 72 by the interest rate you earn. The Rule of 72 illustrates the amazing way money can compound if you just give it enough time. 36 years 12 years 6 years 72 ÷ 2% 72 ÷ 6% 72 ÷ 12% 18 years 72 ÷ 4% 9 years 72 ÷ 8% With 2% interest , your money will double in approximately 36 years. With 12% interest , your money will double in approximately 6 years! Your Money Will Double In… Hypothetical percentage rates and values. Subject to applicable taxes and fees. Does not represent an actual investment.
- 7. The Power of Compound Interest Mary started with a $500 balance on her credit card at a 19.8% interest rate. Each year, she made two additional charges of $75 each and made only the minimum payment of 3.5% of $20 over 5, 10, 15, 20 and 25 years. After 25 years, Mary’s interest charges on her credit card balance amounted to $3,130! Look what happens when compound interest works against you: $580 $1,840 $3,130 5 years $1,200 $2,480 10 years 15 years 20 years 25 years
- 8. Most People Don’t Plan to Fail, They Fail to Plan The Theory of Decreasing Responsibility Over the Years, Your Needs Change. Today 1. Young children 2. High debt 3. House mortgage Loss of income would be devastating At Retirement 1. Grown children 2. Lower debt 3. Mortgage paid Retirement income needed
- 9. Counting on Social Security? If you’re counting on Social Security to fund your retirement, you could be in for a big surprise. The monthly Social Security benefit for the typical retired worker in 2009 is $1,062. ssa.gov, September 2009 Could you live on $1,062 per month?
- 10. Source: Morningstar. Past performance is no guarantee of future results. This chart is for illustrative purposes and does not represent an actual investment. Further, the returns do not reflect the past or future performance of any specific investment. All investments involve risk including loss of principal. The figures in the chart above assume reinvestments of dividends. They do not reflect any fees, expenses or tax consequences, which would lower results. Because these indices are not managed portfolios, there are no advisory fees or internal management expenses reflected in their performance. Investors cannot invest directly in any index. The figures represent an initial investment of $10,000. The Standard & Poor’s 500®, which is an unmanaged group of securities, is considered to be representative of the stock market in general. Bonds are represented by the Barclays Capital Aggregate Bond Index is an intermediate term market capitalization — weighted index, meaning the securities in the index are weighted according to the market size of each bond type. Most U.S. traded investment grade bonds are represented. Municipal bonds and treasury inflation-protected securities are excluded, due to tax treatment issues. The index includes treasury securities, government agency bonds, mortgage-backed bonds, corporate bonds, and a small amount of foreign bonds traded in U.S. The U.S. 30-Day T-bills are government backed short-term investments considered to be risk-free and as good as cash because the maturity is only one month. Morningstar collects yields on the T-bill on a weekly basis from The Wall Street Journal. Treasury Bills are secured by the full faith and credit of the U.S. Government and offer a fixed rate of return, while an investment in the stock market offers no such guarantee. Inflation history is gathered from the Ibbotson Stocks, Bonds, Bills and Inflation module. Growth of a $10,000 Investment December 31, 1979 to December 31, 2009 What kind of return do you need to reach your goals? How can you invest to reach them? Investing in mutual funds may be a very good way! Rate of Return is the Key $243,754 S & P 500 Total Return 11.22% $49,731 30-Day Treasury Bills 5.49% $28,212 U.S. Inflation 3.52% Bonds 8.78% $125,129
- 11. Reaching Your Goals Set a specific goal. Have a specific time to achieve it. Write your goals down. Develop a program to reach them. Decide what price you are willing to pay to reach your goals. Focus on reaching your goals every day. Reaching your goal of achieving financial freedom can become a reality. Start taking action to make your dreams come true. Take these six steps toward reaching your goals: