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- 1. Ray Castaldi, CLU,ChFC President-Castaldi Financial Solutions
- 2. Strategy #1: Knowwhere you stand today Income Expenses Assets & Income Liabilities Where does money go?
- 3. Strategy #1 AssetsLiabilities Total net worth Are you happy with this picture?
- 4. Strategy #2: Beprepared for emergencies Financial emergencies Medical emergencies Personal emergencies Don’t wait until there’s a crisis
- 5. Strategy #2 Makelife simpler for yourself. Complete these worksheets and keep them updated and easily located.
- 6. Strategy #3: Insurefor the unexpected How much? Consider 5 to 7 times your annual income Don’t forget to insure a stay-at-home spouse Different life insurance for people’s needs and budgets Disability and long-term care Most people need life insurance
- 7. Strategy #4: Createa will and estate plan 70% don’t have one 1 Put your wishes in writing Determine who will inherit what Name a guardian for your children Name the executor of your estate 1 www.rolo.com. Most people need a will. 70% 70% of people do not have a will
- 8. Estate planning ismore than just taxes Protects your assets during your lifetime and distribute them properly when you die Not just for the wealthy! Make sure you consider: Family members with special needs Divorced Remarried Stepchildren Etc.
- 9. Estate planning helps:Minimize death expenses Avoid death taxes Deliver assets to the proper people Help a business to survive Ease the burden on your heirs Name a guardian for yourself, should you become incapacitated
- 10. Strategy #5: Reducedebt Average household debt in the U.S., excluding mortgage debt, is about $14,500 1 Americans have never paid more in interest than today — 15% of their disposable income! 2 The average American household had about $9,300 worth of credit card debt 2 23% of Americans admit to maxing out a credit card 1 About 60% of active credit card accounts are not paid off monthly 1 1 www.bankrate.com, 3/1/06. 2 U.S. Senate Banking Committee on Banking, Housing and Urban Affairs, 1/07. Do you know how much debt you currently carry?
- 11. Strategy #5 Theaverage interest rate on standard credit cards is 14.6% 1 Money in the bank earns 1%–2% 1 Make controlling spending a priority 1 www.bankrate.com, 3/07. 2 U.S. Federal Reserve Bank of San Francisco, 11/05. Average personal saving rate 2
- 12. Strategy #5 Alldebt is not created equal some debt, like mortgages, is considered good Low interest rates can let you pay less! Consider refinancing and consolidating college loans, if applicable Federal Housing Financing Board, 2/07. Home Mortgage Rates, 1999 – 2008 12/08
- 13. Strategy #6: Investfor the long term Source: ENCORR Software, © 2008 Morningstar, Inc. All rights reserved. Used with permission. This information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Stocks are represented by the Standard & Poor’s 500 Stock Index, an unmanaged, commonly used measure of common stock total return performance. It is composed of 500 widely held common stocks listed on the NYSE, AMEX and OTC markets. Corporate bonds are represented by the Ibbotson U.S. Long-Term Corporate Bond Index, an unmanaged index representing long-term high-grade corporate bonds, with at least 10 years to maturity. Long-term government bonds are represented by the Ibbotson U.S. Long-Term Government Bond Index, an unmanaged index of public organizations of the U.S Treasury with at least 10 years to maturity. Inflation is measured by the Consumer Price Index published by the U.S. Bureau of Labor Statistics. Past performance is not a guarantee of future results. Stocks Corporate bonds Government bonds Inflation Growth of $1 over time, 1925-2008
- 14. ~ Warren BuffetThe best time to invest is when the market is open .
- 15. “ October. Thisis one of the peculiarly dangerous months to speculate in stocks . The others are July, January, September, April, November, May, March, June, December, August and February. ~ Mark Twain
- 16. Investment considerations Yourobjectives Time frame Risk/reward potential Tax implications Stocks Bonds Mutual funds
- 17. What is astock? A stock represents a share of ownership in a corporation, also referred to as equity . Pizza company Your ownership in pizza company
- 18. Why invest instocks? Balance your portfolio Exposure to different types of stocks Benefit of long-term growth potential
- 19. What is abond? Lenders/Bond Buyers Amount of Loan/Bond Borrower/ Bond/Issuer Company Bond 6% Interest — 30 Years Electronics Company
- 20. Why invest inbonds? Income Balance your portfolio Moderate growth potential
- 21. What is amutual fund? A mutual fund is a collection of stock, bond or money market securities. It is owned by many investors who share common financial goals, and is managed by a professional investment company.
- 22. How a mutualfund works An investor in a mutual fund buys shares of the fund, and as such, each share represents ownership in all the fund’s underlying securities. Fund holdings your ownership in pizza company your ownership in a pharmaceutical company your ownership in electronics company
- 23. Why invest inmutual funds? Professional money management Pooling your money Diversification Low minimum investment Access to your money Benefits of stocks and bonds plus
- 24. Understanding risk Financialor company risk Market risk Economic risk Inflation risk Interest rate risk Credit risk Currency risk
- 25. Strategies to reducerisk Diversify your portfolio Dollar-cost average Don’t try to time the market Stay disciplined Work with a financial professional
- 26. Strategy #7: Assetallocate Asset allocation is the process of dividing assets among different types of investments such as stocks, bonds, or cash. Time horizon and risk tolerance are key to asset allocation. Source: Brinson, Singer and Breebower, “Determinants of Portfolio Performance II,” Financial Analyst Journal, May/June 1991. 5% security selection 3% market timing/other 92% asset allocation
- 27. Strategy #7 Source:Calculated by John Hancock Funds, LL C using information and data presented in ENCORR Software, ©2009 Morningstar, Inc. All rights reserved. Used with permission. This information container herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. The S&P 500 Index is an unmanaged index and cannot be invested in directly. Past performance is not a guarantee of future results. This data is not intended to represent the performance of any John Hancock mutual fund. Holding periods, on a rolling basis Investment risk lessens over time — S&P Index 1926–2008
- 28. Strategy #7 Theimportance of rebalancing By maintaining target allocations, you add discipline to the process 50% stocks 25% bonds 25% cash 50% stocks 25% bonds 25% cash 60% stocks 30% bonds 10% cash Initial Target Allocation Varying Returns Distort Allocation Target Allocation Restored
- 29. Strategy #8: Dollar-costaverage Investing at regular intervals helps reduce risks. Spreading purchases over high and low price periods helps you accumulate more shares at a lower cost. Adds discipline to the process Dollar-cost averaging doesn’t guarantee a profit or protect against loss, but it can reduce your overall risk. Such a strategy involves continuous investments in securities regardless of fluctuating prices, and investors should consider their ability to continue purchases through periods of low price levels. INVESTMENT NAV PRICE SHARES PURCHASED $100 $10 10 $100 $20 5 $100 $25 4 $100 $25 4 $400 $80 23 Average share cost: ($400 ÷ 23) = $17.39 Average share price: ($80 ÷ 4) = $20.00
- 30. Strategy #9: Contributethe maximum to retirement plans Americans are living longer We retire younger Traditional pensions are fading Social security won’t be enough Saving for retirement is more important than ever!
- 31. Strategy #9 Payyourself first Pre-tax contributions Matching contributions Painless savings Tax deferral Contribute to retirement plans
- 32. Strategy #9 Thisexample is hypothetical and does not represent any particular investment. Chart assumes $500 invested monthly at 8% for 30 years tax-deferred, with 20% tax rate and 40% tax rate.
- 33. Strategy #9 Retirementcontribution—Maximum limits 2008 IRAs, Traditional or Roth $5,000 + $1,000 catch up SIMPLE IRAs & SIMPLE 401(k)s $10,500 + $2,500 catch up 401(k)s, 403(b)s, 457(b) plans $15,500 + $5,000 catch up Owner only 401(k)s $45,000 + $5,000 catch up Note: Catch-up provisions are available only to people 50 years or older. The IRS imposes a 10% penalty for early withdrawal if you are under age 591/2, in addition to regular income taxes.
- 34. Strategy #10 Financialconsultants or planners Accountants or CPAs Insurance planners Attorneys Give your financial prosperity the financial attention it deserves You might use several of these experts, or all of them, in the course of your lifetime.
- 35. Strategy #10 Clarifyyour investment goals Establish a financial plan Regularly re-evaluate goals and progress Remain disciplined A financial professional can help you:
- 36. Next steps Seewhere you are now Fill out the Know Where You Stand worksheet Protect yourself and your family Fill out the emergency checklist Review your insurance Find out how to go from where you are to where you want to be Sign up for an individual consultation
- 37. A word aboutrisk The performance data contained in this presentation represents past performance, which does not guarantee future results. Performance, especially for short time periods, should not be the sole factor in making your investment decisions. A fund’s investment objectives, risks, charges and expenses should be considered carefully before investing. The prospectus contains this and other important information about the fund. Please read the prospectus carefully before investing or sending money. For prospectuses or for performance current to the most recent month-end, call your financial professional or John Hancock Funds at 1-800-225-5291, or visit our Web site at www.jhfunds.com. John Hancock Funds, LLC • MEMBER FINRA | SIPC • 601 Congress Street, Boston, MA 02210-2805 • www.jhfunds.com NOT FDIC INSURED. MAY LOSE VALUE. NO BANK GUARANTEE. NOT INSURED BY ANY GOVERNMENT AGENCY. SD10PROVSEM 6/09
Editor's Notes
- #2 John Hancock Funds January 17, 2011 10 Proven Strategies
- #3 John Hancock Funds January 17, 2011 10 Proven Strategies Most people would like to save more for emergencies, retirement or college because they know how important that is for overall financial security and well-being. In order to successfully build any plan for the future, you need to know where your money goes now . Not only will this help you better understand your current situation and budget, you’ll be able to identify spending habits you don’t like and ways to reduce debt, in order to find dollars available for investment.
- #4 John Hancock Funds January 17, 2011 10 Proven Strategies Take a look at the worksheets in your brochure. For this exercise, please use your net or take-home pay. For many people, take-home pay (after all taxes have been deducted) is much less than the gross, and this is the amount that should be kept in mind for any budget discussions. You’ll see that you are asked for basic information such as mortgage and rental expenses, as well as household expenses. You should be able to ballpark most of these expenses, even if you don’t know them to the exact dollar. If you don’t, it might be a sign that you are out of touch with your spending habits. Add up all your expenses, and deduct it from your income. What you are left with it the total dollars available to invest or save. Then the question to ask yourself is, are you happy with this picture?
- #5 John Hancock Funds January 17, 2011 10 Proven Strategies Once you have a clear understanding of your current financial position, the next step is to prepare yourself and your family in the event of an unforeseen situation. When you’re in a crisis, it’s hard to think calmly and clearly about the best course of action. That’s why we urge you to do the preparation NOW, when presumably you have time to think. Hopefully, you never have an emergency situation! But realistically, you can’t control what happens to you and your family, so it’s best to be prepared. There are three main types of emergencies. (read slide)
- #6 John Hancock Funds January 17, 2011 10 Proven Strategies Financial emergencies -- Financial experts all agree that an emergency fund is a necessary part of everyone’s financial plan. That means money that can be tapped quickly and easily, without any penalties or restrictions. How much you set aside should be determined by your living expenses, but on average you should have a minimum of three to six months’ total living expenses set aside. Medical emergencies – before you need the information, write down and keep in a handy place all the vitals for you and your family. Physicians and phone numbers, blood types, allergies, medications and other family details are all important, as are insurance ID numbers and coverage terms. Personal emergencies – If you’re delayed in traffic, is there someone who can pick your child up at daycare? Do you know the full names and telephone numbers of all your children’s teachers? Make sure to keep all this information up-to-date and in an accessible location, but also make sure you keep it secure!
- #7 John Hancock Funds January 17, 2011 10 Proven Strategies One of the most important things you can do now to protect your family is to make sure you have adequate insurance for their needs. Life insurance – most people don’t have enough life insurance. Or any! But it’s too important to ignore. Life insurance answers the financial question of “how will my family live without me?” One rule of thumb is to buy life insurance that is equal to five to seven times your annual income, but there are many factors to consider, such as your income and debts, future income needs and the protection for your family you want. Disability insurance – if you’re the primary breadwinner or run your business, you should consider disability insurance. Disability income will replace your salary or wages by providing monthly benefits in the even of accident or illness. It protects you, and your family, if you are unable to work and earn an income. Long-term care insurance -- this is a policy that offers care or treatment for an injury, illness, or loss of functional capability. LTC insurance offers many benefits, including a way to pay for the high costs of nursing homes.
- #8 John Hancock Funds January 17, 2011 10 Proven Strategies If you do nothing else to take care of your legal affairs, you should write a will. Every adult should have one, but most of us do not. A will is a legal document that protects your assets and helps reduce confusion and potential problems over your estate. Read slide.
- #9 John Hancock Funds January 17, 2011 10 Proven Strategies Read slide. As with any legal documents, make sure to keep your will and estate plan current. Any time you have a major life change – marriage, divorce, birth, death, job change—you should reexamine your will and estate plan to make sure it still reflects your needs.
- #10 John Hancock Funds January 17, 2011 10 Proven Strategies Read slide.
- #11 John Hancock Funds January 17, 2011 10 Proven Strategies Read slide. These are pretty scary statistics, aren’t they? All the more scary because they affect so many people. When you have complete your assets and liabilities worksheets from Strategy #1, you should take a close look at your spending habits. Are you happy with your financial picture, or do you wish you could change elements of it?
- #12 John Hancock Funds January 17, 2011 10 Proven Strategies As you can see, the personal savings rate in America has dropped significantly, and very quickly. More and more people are using credit cards to purchase things they can’t afford, and then they start a debt cycle difficult to get out of. While everyone should have an emergency fund, it doesn’t make sense to try and invest money if you owe money on credit cards. You need to prioritize both your spending and your saving habits. If you have a credit card charging you 15% interest, and you pay off that credit card bill, that’s theoretically the same as if you earned a 15% rate of return on your money. So it makes sense to try to eliminate your costly debt burdens before beginning an investment plan.
- #13 John Hancock Funds January 17, 2011 10 Proven Strategies While credit card debt has really no upside potential, the use of debt in terms of home mortgages is another story. For many people, buying a house is a lifelong dream, and one that can also make sense financially. After all, you have to live somewhere, so why not in your own home? You benefit from ownership, the chance to build equity as home prices increase, and the tax break on mortgage interest. Today’s rates are still quite low, even if they are not at their historical bottoms. This makes home ownership still appealing to many Americans. Once word of caution: don’t view your home and home equity as an additional bank account! Many people have refinanced their homes to take equity in the form of cash out of their houses. While there are probably good reasons to do this, too many people will probably waste a lot of that cash.
- #14 John Hancock Funds January 17, 2011 10 Proven Strategies Investing for the long term is an important financial strategy. For many people, stocks are part of a long-term investment plan to help them achieve their financial goals. That’s because stocks have been the best performers over time, easily outpacing inflation and other common types of investments. Review chart. Pick a time period form the chart and think of the turmoil that investors at the time lived through. If you could go back in time, would you advice people of the period to put money in the market or not? You’d probably urge them to invest!
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- #27 John Hancock Funds January 17, 2011 10 Proven Strategies Read slide. Using the right asset allocation can potentially lower your investment risk and increase your returns, and your asset allocation decision is one of the most important you can make. In fact, research indicates that 92% of the variation in portfolio returns can come from asset allocation decisions.
- #28 John Hancock Funds January 17, 2011 10 Proven Strategies Time horizon refers to your age, and how many years you have to invest before you need the money. An old adage says that greater risk equals greater reward, and investments with higher volatility (i.e., more dramatic price swings) have a higher expected return, over long time periods. But these investments also have the potential to lose money, especially over short periods of time. A long time horizon allows you to bear some risk in your investments because of your ability to ride out potential fluctuations by holding your investments through an entire market cycle. This chart illustrates the market’s volatility over specified time periods. You can see how the investment risk lessens over a longer time period.
- #29 John Hancock Funds January 17, 2011 10 Proven Strategies Stock and bond values don’t move in a straight line. Left alone, your portfolio can stray far from your original asset allocation. And if it does, you may take on more, or less, risk than you had originally intended. By regularly rebalancing, or shifting your money among investments in order to maintain your target allocations, your portfolio is more likely to maintain a consistent risk profile. Rebalancing has another potential benefit. Although rebalancing is not a market timing strategy, its very nature can form you to move money from an asset class that has performed well (selling high) into an asset class or fund that has performed poorly (buying low.) This strategy may provide attractive returns over time and reduce the overall volatility of your portfolio.
- #30 John Hancock Funds January 17, 2011 10 Proven Strategies Buy low, sell high , is the best way we know to accumulate wealth. That’s why we urge you to consider dollar-cost averaging. It’s critically important to consider what—and how you invest. Dollar-cost averaging is the simple investment strategy of investing a consistent amount on a regular basis, usually monthly. By practicing dollar-cost averaging, you ensure that you’re buying fewer shares at a high price and more shares at a lower price, which is a goal for many investors. This may lower the average price you pay for an investment, while lowering the risk of buying at the wrong time.
- #31 John Hancock Funds January 17, 2011 10 Proven Strategies The #1 savings goal for most Americans is having enough money to live comfortably in retirement. * How are we doing? Only 24% of Americans feel very confident that they will have enough money saved for retirement. That leaves lots of room for improvement. *EBRI Issue Brief No. 292, 4/06
- #32 John Hancock Funds January 17, 2011 10 Proven Strategies Saving for retirement is probably more important than ever before. How to succeed? Pay yourself first . If you pay yourself first in the way of retirement contribution, you ensure that your most important goal receives the funding it deserves. Retirement plans help you find the discipline to do that, by taking it from your paychecks. Many types of retirement vehicles allow contributions to be made before taxes, offering you a tax break as well as savings opportunities. And many companies also offer to match employee contributions. If you’re fortunate enough to work for such a company, make sure you take advantage of this benefit. A company match is like free money!
- #33 John Hancock Funds January 17, 2011 10 Proven Strategies Tax benefits and compound growth make regular contributions grow faster than you might think. Over long periods of time, tax deferral makes an incredible difference in the amount you accumulate. Review chart and numbers.
- #34 John Hancock Funds January 17, 2011 10 Proven Strategies Read slide.
- #35 John Hancock Funds January 17, 2011 10 Proven Strategies You entrust your health to your doctor. You trust your children to their teachers. Doesn’t your financial prosperity deserve the same professional attention? Do you have someone to help you set long-term goals and plan for the future? Trained financial professionals have the experience it takes to help you make the best decisions to suit your specific goals. Here are some of the professionals commonly used to develop a well-rounded plan. Read slide. Depending upon you financial needs, you might use several of these experts, or all of them, over the course of your lifetime. Since these are usually people involved in your community, they can help out with referrals to other experts you might need, too.
- #36 John Hancock Funds January 17, 2011 10 Proven Strategies Read slide, and state that you would be happy to help anyone in the audience take the next step.
- #37 John Hancock Funds January 17, 2011 10 Proven Strategies Read slide.
- #38 John Hancock Funds January 17, 2011 10 Proven Strategies Read slide. Thank you so much for coming to our 10 proven strategies seminar. I appreciate your taking the time to come here, and I hope that you found the information useful. Once again, I am ( name) of (firm), and I’ll be happy to answer any questions you might have.