Making Financial Success Happen - Strategies for Underrepresented Groups
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This document summarizes a seminar on achieving financial success. The seminar objectives are to recognize fundamentals for building wealth, identify factors leading to lower wealth accumulation among underrepresented groups, identify personal habits and values impacting financial futures, and create action plans for goals. The seminar discusses the importance of financial planning, controlling expenses, diversifying assets, and periodically reviewing goals and budgets. It provides tips for getting started with financial planning including understanding terminology, paying yourself first, and being ready for opportunities.
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Making Financial Success Happen - Strategies for Underrepresented Groups
- 1. (BEYA 2316) Making Financial Success Happen - Make Your Dream a Reality Presenter: Davyd Jones, Financial Advisor, Raymond James & Associates, Inc. Moderator: Vanity Eddy, Quality Assurance Stability Coordinator, Accupac Panelists: Richard Williams, Manager of Engineering, Northrop Grumman Corporation Melissa Bright Lemmond, Systems Engineer, Northrop Grumman Corporation
- 2. Seminar Objectives • Recognize financial fundamentals to building wealth • Identify the factors that lead to lower wealth accumulation among members of underrepresented groups • Identify personal habits and values that can impact a strong financial future • Create an action plan for achieving financial goals
- 3. Why this topic is important • Why have a game plan • Cash Flow is King & Impact of Taxes • LT Cap Gains / Dividend Income / Real Estate / Business / Passive • Wages • Money is a tool – how are we using it • Accountability Savings • Family / investments • Emergencies / Health • Getting to a period of your life where W2 income is not needed to support you life style Personal Impact:
- 4. How to buy stock / Where do I start • Two ways: • Do research yourself • Hire someone to do it for you • What to look for in an advisor • Establishing an investment plan • Diversifying your assets using prudent experts • Monitoring/Reviewing prudent experts and client situation • Control Expenses • Avoid Conflicts • Game Plan Game Plan Game Plan • Put together a game plan for what it is you’d like to accomplish in life. • Start where your feet are and go from there • Proverbs 15:22 “Without counsel purposes are disappointed: but in the multitude of counsellors they are established”
- 5. “Vehicles to Use” • Tax Deferred Vehicles: • Albert Einstein, “8th wonder of the world is compound interest.. He who understands it earns it and he who doesn’t pays it” • Define Benefit Plans: Pension • 401K: Safe Harbor / Owner K • 457 & 403b • Profit Sharing Plans / Money Purchase • Personal Retirement plans: • ROTH IRA • Traditional IRAs: SEP/SIMPLE • Annuities • Exchange Funds • Non Tax-Deferred: • Brokerage Account • Stocks • Bonds / Tax Free Muni Bonds • Mutual Funds/ ETFs • Alts • Real Estate • Private Equity • Annuities • Exchange Funds • Business: • LLC • LLP • Estate Plans
- 6. Tips to Making Financial Success Happen • Discuss financial goals and budget with significant others (if applicable) • Important to come to an agreement/mutual understanding • Periodically review financial goals and budget • Make conscientious and deliberate decisions and choices in order to meet financial goals and stay within budget • Differentiate between a need and want • Talk with a financial planner • Big misconception that you need a lot of money to have one • Meet with yearly
- 7. More on Getting Started (“Don’t by things you cant afford… ” Steve Martin SNL) • Understand the Language • Money vs Currency • Rich vs Wealthy • Assets vs Liabilities • Have an Entrepreneurial Mindset • Know your numbers (audit your current finances) • Pay yourself first • Credit-cards as a tool • Setup your Personal Financial Infrastructure • Build your information network • How many and what type of accounts do I need? • Get lucky – be ready to take advantage of opportunities
- 8. Parting Thoughts • “He who every morning plans the transaction of the day and follows out that plan, carries a thread that will guide him through the maze of the most busy life. But where no plan is laid, where the disposal of time is surrendered merely to the chance of incidence, chaos will soon reign.” – Victor Hugo • There are 8,760 hours in a year – are you using your time wisely
- 9. Backup
- 10. The Engineer The Investor Taxable Income $300,000 $300,000 Source of Income Wages LT cap gains, qualified dividends Federal income tax due $80,295 $42,742 Payroll tax paid $12,236 $0 Total Tax Burden $104,767 $41,742 Effective tax rate 34% 14%
- 11. Income Brackets: Single Individual Tax rate on ordinary income Rate on qualified dividend/LT cap gains First $9,325 10% 0% $9,325 - $37,950 15% 0 $37,950 - $91,900 25% 15% $91,900 - $191,650 28% 15% $191,650 - $416, 700 33% 18.8% $416,700 - $418,400 35% 18.8% Income above - $418,401 39.6% 23.8% (3.8% Medicare tax)
- 12. Warren Buffett / Berkshire Hathaway Coca Cola / Wells Fargo Company Shares Owns Dividend rate Yearly Income Income/hour KO 400M $1.48 $592M $67,579.90 WFC 467.98M $1.56 $730.06M $83,340.19
- 13. Reflecting on what we discussed Why its important • Freedman’s Bank • Knowledge is power - impact • Have-to invest in ourselves • Take ownership of your future • Take leap of faith • Psychology of money, behavioral finance & investing • Cash Flow is King • Money is but a tool Things you should know • Books: • Millionaire Next Door, by Stanley & Danko • The Intelligent Investor, by Graham • One up on Wall Street, by Lynch • Economics: • What is GDP • CPI: Fiscal Policy & Its impact • FOMC • Tax reform • Infrastructure • Domestic and World
- 14. Seminar Overview • Learning Objective: Examine the methods that minorities can use for achieving financial success A growing minority population presents opportunities for financial success. Financial success is about changing your perspective on wealth, how you grow it, how you maintain it, and how you preserve it. It first starts with getting vested into helping change the trajectory of your future. Wealth transfer is happening. So what can be done to deliver financial education and financial planning to minorities? How do we position ourselves to be a part of it and benefit from it? This seminar will help you to understand the behavioral pitfalls we fall into as a community; the personal, social, and mental roadblocks to obtaining wealth; and how we are a part of that ride to investing.
Editor's Notes
- Remind them we will go over an example of cash flow through LT Cap Gains & Dividend Income -make sure you have a good accountant – there are risks in every move you make.. We all define risk differently – but it revolves around how much work you want to put into accumulating cash flow – Real estate is a lot different than owning stocks… one is very liquid while the other is not and different level of “taking care of either or” – same goes for owning your own business – hiring people – trusting other people to show up to work etc.. If you don’t build savings you are putting yourself in a risky position – if something bad happens where are you going to grab money from? Family, friends or your life’s savings
- Remember – investments are only a piece of wealth planning!!! So make sure when planning to hire someone or do it yourself that you take into account everything!! example: you have $40k in debt paying 12% interest – that’s $4,800/year – no need to be investing if your paying $4,800 servicing debt what if you have student loans and you’re a teacher (maybe the school system you’re in pays off student debt) or your profession what if you’re about to buy a car – how do you make that purchase? buying a business or own a business and buying equipment – how do you calculate present value of future cash flows? Discount model putting together an estate plan – selling a business etc, Topics to cover when looking for an advisor/counselor to help you build wealth: -is he/she acting solely in your best interests -is he/she acting with skill, care, prudence & diligence -is there a documented process -do they go over regulations and explain how they get paid -is there a clear understanding of advisory service they provide -what tools do they use to evidence professional advice -what process do they have for educating or review accounts with you Is there a clear process for how they evaluate clients (no client is the same so no plan should be) do they go deep to understand your goals and values (are they digging deep in understanding you, your family, your goals, what you value - Are they reviewing (holistically) your situation – liquidity needs, tax constraints, time horizon, risk tolerance etc. Do they demonstrate good portfolio design – are they able to explain why they chose the investments they recommended – do they have a process How do they implement changes needed – how do they select their investments: managers, products etc. Another example of it’s not about how much you make its about how much you keep… If you invest and the market takes a hit -10, -15, - 25, -40% how does that impact you… how much more does your investments have to work to break even… reason to work with a professional that has a prudent process and invests on risk adjusted returns basis its always about how much you keep!!
- Financial Goals Also discuss with your children Identify short, mid and long term goals Where to do you want to be, what do you want to have, how much you want your net worth to be etc. E.g. pay off debt, pay for kids college, retire at 55 Review progress yearly to identify changes (in goals or contributions) If employer matches some percentage of 401K contribution, make sure you contribute at least that amount Start contributing to 401K ASAP Establish a credit history Budget Also discuss with your children Review monthly to see how progress Re-evaluate at least once a year Have savings as a line item Have money automatically removed from checking to encourage savings/investments Meeting financial goals and staying within budget Making dinner at home vs going out to eat Bring lunch from work vs going out to eat Looking for discounts Hold off buying item till money is saved Setting caps on spending of needs and wants If receive unexpected funds, pay down debt or invest
- It’s not about how much you make, its about how much you keep!!
- It’s not about how much you make, its about how much you keep!