1	"Financial planning is the long-term..." Financial planning is the long-term process of wisely managing your finances so you can achieve your goals and dreams, while at the same time negotiating the financial barriers that inevitably arise in every stage of life.
2	"Step 1 Establish Goals" Step 1 Establish Goals Step 2 Gather Data Step 3 Analyze & Evaluate Your Financial Status Step 4 Develop a Plan Step 5 Implement the Plan Step 6 Monitor the Plan & Make Necessary Adjustments
3	"S = Specific" S = Specific M = Measurable A = Attainable R = Realistic T = Timely
4	"Specific financial products should not..." Specific financial products should not be goals of their own. (i.e. I want to own a hedge fund, or last year’s “hot” mutual fund) I want to beat the stock market
5	"Buying a home in five..." Buying a home in five years Paying for children’s college in 12 years Own a Ferrari in 10 years. Take care of aging parents. Take a trip around the world in five years. Pay for daughter’s wedding in 10 years. Contribute 10% of income each year to church or synagogue or other religious/charitable organization.
6	"Learn how to speak Spanish..." Learn how to speak Spanish conversationally by December 31st, 2015 Learn how to ski by my 35th birthday. Learn how to play guitar by my November 21, 2012 Tour Eastern Europe during the summer of 2014 Volunteer once a month on the 15th as a Big Brother.
7	"Inflation rate" Inflation rate Tax rate Investment returns
8	"Cost of goal" Cost of goal Amount you save toward it. The date you will achieve it.
9	"Procrastination" Procrastination the earlier you can start saving toward your goal, the more often you save toward your goal, and the longer you can keep your money invested, the easier it is to reach your financial goals. Take advantage of the compound interest (exponential returns). Example: $100 earning 10% = 110 at the end of year one, 121 @ the end of year 2, 133.10 @ end of year 3. Each year the investment earns the same 10%, but the principal is higher. Albert Einstein is credited (whether true or not) with saying that compound history is the “greatest discovery of the 20th century.” Rule of 72 – an easy formula to determine the investment return you need to double your money in a certain number of years. If you want to double your money in six years, you need a 12% compound annual return (72 / 6 = 12) Spending habits – Aside from daily spending habits, pay attention to debt to equity ratios. i.e. mortgage payments should not exceed 28% of gross income. Total debts should not exceed 36% of gross income. Inflation – long-term average 3.2% Taxes – interest from CDs is taxed. Short-term trading is taxed at a higher rate than Long-term investments. The Media – be careful what you read and hear on the media. Financial Media shows are telling you what the sentiment is on the trading floor. There is always a sense of urgency. Too much focus on short-term volatility. “Best stocks to buy now!” “What should you do with your money now?”
10	"State a positive goal –..." State a positive goal – “I want to save for my son’s college education.” Set a date – “I want to save for my son’s college education by 12/31/2020.” – Putting a date on your goal makes it real and places a deadline on your goal. Write it down – Put it on your computer screen, on your bathroom mirror. It’s good to have reminders staring at your face. Stay focused – start today! Investigate what it takes to reach your goal. Find out the cost of tuition, room & board in today’s dollars. How much will you need to save by then? Meet with a financial advisor who can guide you through the process.
11	"Assets" Assets Liabilities/loans Sources of income – Pensions, Social Security, 401k, savings and investments, work, part-time job Expenses – how much you need each month to maintain your current lifestyle? Tax returns Review Insurance Policies Review Beneficiaries Review Wills/Trusts
12	"Time – Even if you..." Time – Even if you want to “dabble” in the stock market, experts suggest you need at least 1 hour a week per stock you plan to research. Knowledge – There is a vast amount of highly specialized knowledge. Tax laws are constantly changing. Market conditions change. Desire – Do you really want to be spending your time monitoring your progress on your financial plan? Temperament – do you get emotional with your financial decisions? Do you compartmentalize or do you examine the big picture?
13	"Determine how much you need..." Determine how much you need to save and the returns you need to reach your goals. Review your investments to see if you are taking on too much risk, paying too much in fees, suffering returns that are too low, or are in investments that are unsuitable for you. Determine how much money you may need in retirement and how best you can save for it. Find out if you are saving enough. And, if you are saving in the right places.
14	"Track expenses" Track expenses. How much do you need to maintain your current lifestyle? Are you prepared for emergencies? - Set up emergency fund 12 months of cash reserves. 24-36 months of spending for retirees. Are you handling your debts effectively? Have you checked your credit score? Good debt vs. bad. Mortgage interest is tax deductible. Credit card debt is not. Discuss with your tax adviser.
15	"Are you taking advantage of..." Are you taking advantage of your company retirement plan? Are you optimally investing your company retirement plan? Are you taking on too much risk? Are you paying too much in fees? Are you suffering returns that are too low? Owning investments that are unsuitable for your situation?
16	"If you were to die..." If you were to die today, who would be most affected? – Life Insurance policies. If you were to become unable to work due to illness, who would be most affected? Disability policies. Do you have an umbrella insurance policy? Provides liability coverage above & beyond homeowner’s insurance. Ex. If someone slips down the stairs on your property, you may be held liable. Buy long-term care insurance in your mid 40s to mid 50s as a way to protect your estate from being drained due to medical expenses, allowing you to pass wealth on to your heirs. Adult Day care ($67/day), Nursing homes ($72,000 to 80,000 annually), Assisted Living ($37,000), and Home Care ($21/hour)
17	"Once you understand where you..." Once you understand where you are, you can begin focusing on how much you need to save for each goal and what types of investment returns you need to meet your goals. Take a holistic approach to your investments. One common mistake investors make is to compartmentalize their investments. They identify a single issue, resolve it, and then move on to the next issue. They fail to examine the big picture when making financial decisions. As a result, they make a series of bad decisions instead of one good one. Distinguish between short-term investments (emergency cash reserves) and long-term investments (ex. Retirement, buying a beach house). A long-term investment plan always begins with asset allocation. i.e. What percentage of your investments should go into which of the 19 asset classes such as stocks, bonds, cash, real estate, gold, oil & gas, government securities, sovereign debt, corporate bonds, small cap stocks, large cap stocks, growth stocks, value stocks, emerging markets.
18	"Have you checked your social..." Have you checked your social security benefits? www.ssa.gov What sources of income will you have during retirement? Have you saved enough for retirement? If you’ve switched jobs, take your old 401k with you. Set up an IRA Rollover.
19	"Avoid titling assets between generations" Avoid titling assets between generations. Do you have a will? When was the last time you updated it? Have you named a guardian for minors if you have children? Have you named a financial guardian? Have you established a living trust? Do you have a Power of Attorney? Do you have a Healthcare Power of Attorney? Authorizing someone to make medical decisions on your behalf. Do you have a Living Will/Advanced Medical Directive? Indicates the type of care you would want if you were terminally ill or permanently unconscious. When was the last time you checked your beneficiary designations for your retirement accounts and insurance policies? Do you have a personal financial inventory listing: your professional advisers, insurance policies, and investment accounts that your survivors might have to scramble to find in the event of your death or other crisis. (Names and phone #s of your attorney, accountant, financial adviser, location of important documents such as wills, powers of attorney, property deeds, a listing, with account numbers and document location, for all insurance policies, bank accounts, investment accounts, credit card accounts and loans; the location of a safe-deposit box, and the keys). Be sure that loved ones or advisers know where the inventory is stored.
20	"Because your life will undergo..." Because your life will undergo frequent changes, and because your assumptions require constant updating, financial planning is a lifelong process. This means you need to revise your plan periodically. Your financial plan should be revised if: One to three years have passed since you last updated it. There have been any changes in your: Goals Health Marital status Occupation or employment Income Expenses There has been a birth or death in the family.