❒ Why Financial Literacy?
Financial literacy is very important in everyone's life, regardless of the industry a person works in and their stage of life. If a person is equipped with sufficient financial knowledge he/she can plan adequately to manage current finances and retire successfully. A vast majority do not plan efficiently, resulting in no financial stability and/or incurring debts. Reason being, they lack Financial education and don't have access to the tools to assist them to make the right decisions.
❒ Is this Rocket- Science?
Not at all! This is where we come in. Our content is consolidated and simplified greatly; you will be able to comprehend it easily, making your literacy sessions here enjoyable. We break all complicated concepts down to the simplest level to eliminate any dilemma that might befall you. Our goal is to ensure that you are supplied with tools and resources, empowering you to make educated decisions and plan smartly, securely yet simply. Get yourself started now and browse through our content. If you like our content and seek to learn more, just get in touch.
❒ Wealth Building - The 6-Step Guide
Wealth building is a step-by-step process and we help in every single one of them.
Increase Cash Flow
This means having more income or increasing your savings. A simple example is, if you earn $100 every month in addition to the income you make or are able to save $100 every month in addition to the savings you do regularly, then you are increasing your cash flow by $100 every month, resulting in a cash flow of $1200 every year.Debt Management
Are you aware of all your accounts? Are you honest about your spending and do a check on your credit report regularly? Have you thought about consolidating your debts? If you have multiple debts with high interest rates, you can consolidate them into one with a lower interest rate. When you chalk out a debt management strategy you can start by either paying off the debt with lower balance or the one with higher interest rate.
Emergency Fund
This refers to saving 3-6 months of your income to manage unplanned expenses. Do you have a cash reserve set aside for financial emergencies?Proper Protection
Is your income safe-guarded against any loss? Do you have assets which do not lose their value overtime? You need to invest wisely, making your income and savings independent of market loss.Manage Inflation and Taxes
The only way you can build wealth is by outpacing inflation and taxes, or at least break even. Let's say you get a raise of 3% one year and inflation is 5%. Due to inflation your expenses will go up resulting in lowering your savings. Your 3% raise will not suffice to build enough wealth. Are you getting the right rate of return from your investments to beat inflation? Majority of people misjudge mortgage as being their biggest expense not realizing that taxes eat up their paycheck first. Consider that you earn $100. On this you are subjected to an average 22%* of Federal Tax, 6%* of State Tax 6.2%* of Social Security Tax and 1.45%* of Medicare Tax, which leaves you with $65 in your hand. Mortgage and other expenses come in later. Do you know how to lower the taxes or are you aware of investments to increase your tax-free returns?
(* taxes vary from State to State, we have taken averages in our example.)Preserve Wealth
Making money is actually easier than protecting it from intruders. Are you clear on asset protection and transfer of money to your heirs? Do you have any legal documents safe-guarding your assets, protecting you and your family from lawsuit, bankruptcy, litigation or probate court? Building wealth is important, but preserving is more valuable. Legacy and Estate planning help transferring money to your heirs, effortlessly.
Do you agree that every family needs the above strategies?
❒ The Rule of 72
72 ÷ Rate of Return = Time Taken (in Years) to Double your Money
The Rule of 72 is a straightforward formula, which tells you simply how much time you would take to double your investment, for a given annual rate of return. Let's consider and example of an individual, 29 years of age who has invested $100,000 into an investment.
Scenario 1: Rate of Return = 2%
Time taken to double the money is 72 ÷ 2 = 36 years. In 36 years the individual will be 29 + 36 = 65 years old, which means that this individual has 1 chance to double the money before reaching the age of retirement, making it $200,000.Scenario 2: Rate of Return = 4%
Time taken to double the money is 72 ÷ 4 = 18 years. Now 29 + 18 = 47 and 47 + 18 = 65. Now, the same individual has 2 chances of doubling the money, which will result in $400,000 by 65 years.Scenario 3: Rate of Return = 8%
Time taken to double the money is 72 ÷ 8 = 9 years. Now 29 + 9 = 36, 36 + 9 = 47, 47 + 9 = 56 and 56 + 9 = 65. So we notice here that with a greater rate of return the individual has 4 chances of doubling the money, which will result in $1,600,000 by 65 years.
You can clearly see that the Rule of 72 highlights how Time and Rate of Return are two most important factors in building wealth, without having to do much calculation. Therefore, the earlier you start investing and greater the rate of return, the more are the chances to double your investment, leading to greater monetary gain.
❒ Power of Indexed Contracts
Have you heard of Indexed Contracts? This might be one of the most powerful tool to maximize your growth and secure it from market downturn.
We are familiar with Fixed Investments (blue line) like bank savings, corporate/ government bonds, CDs. Are those going to beat inflation and taxes?
Another investment strategy is the Variable Investment Strategy (red line). Stocks, bonds, gold, oil, almost everything invested in the market follows the Variable Investment strategy. They are riskier due to market downturn.
There exists one more strategy called the Indexed Strategy (green line). They give you market like growth at the same time lock your gains when the market goes down. They bring the best of both strategies providing growth along with security.
Did you come across any product/ investment which locks your growth?
Would you like to know more about these investment strategies? Just reach out to us.
❒ Taxes - Our Biggest Expense
Is it really possible to retire without paying any taxes? Definitely not, but you can minimize them to a great extent, ultimately contributing to your savings. Taxes are categorized into 3 types or buckets - Tax-Now, Tax-Later and Tax-Free. Hover over the cards to see details associated to each of them. A lot of people invest in 401K and stocks, but what happens when you make gains? You pay taxes on them. What happens when you retire and start making withdrawals? You pay taxes again. What happens when you transfer money to your heirs? Phew! Taxes again. Would it not be wiser to invest in the appropriate bucket, which minimizes taxes and maximizes tax-free gains? Taxes are our biggest expense. We need to have the right balance between the different buckets, and invest wisely to maximize our tax-free growth.
❒ Inflation - The Silent Killer
Inflation and longevity are two major risks against your retirement. Inflation is the silent killer on your retirement plans. Average inflation rate is 3.8%. Considering this rate, if a person has $5K as monthly expenses, then he/ she would need $7K after 10 years and $10K after 20 years. So basically the living cost doubles every 20 years. We are not considering situations where inflation rates spike up, like recently we just touched a crazy 9.1% in June, 2022.
Lets consider an example where an individual is 45 years old today and retires after 20 years i.e. at the age of 65 years, he/she would have a living cost of $10K a month which is $120K per year after-tax cash, amounting to approximately $150K before tax (Assuming Effective Tax Rate: 20%). Technology has its benefits and has increased our life expectancy; average life span has increased to 78-85 years. Assuming the individual lives up to 85 years, he/she basically needs to have $150K x 20, which is $3 Million at the age of 65 to retire.
Longevity is going up, thanks to technology. But this also means we need to have enough for medical care and expenses in the later stage. Are we prepared for it?
What percent of people do you think are on track for this kind of retirement?
❒ Medical Risk and it's Impact on Retirement
We are more likely to get sick before we die. At later stages of life we are at the risk of heart attack, stroke, invasive cancer, renal failure, severe cognitive impairment, loss of 2 of 6 activities of daily living (ADL) - eating, bathing & hygiene, dressing, grooming, mobility, toileting & continence.
Do you think health insurance covers all costs like mortgage, lost wages, utilities, food, college, deductibles, co-insurance, uncovered medications & procedures?
At 65 years of age we go on Medicare; it pays $0 for long-term care services after the first 100 days. The average period a person stays in long-term care, is between 0-5 years.
Are you ready to protect your retirement wealth from chronic, critical and terminal illnesses? These can drain down your retirement wealth. Hover over each item to see long-term care costs for different types of care, today. Expect them to double or become more in the next 20 years, due to inflation (Medical inflation is above 5%).
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