Peter Cosentino. CUSO Financial Services, L.P. NASA Federal Investment Center

Transcription

1 Peter Cosentino CUSO Financial Services, L.P. NASA Federal Investment Center NOT FDIC INSURED. MAY LOSE VALUE. NO BANK GUARANTEE. NOT INSURED BY ANY GOVERNMENT AGENCY.

2 Disclaimer *Non-deposit investment products and services are offered through CUSO Financial Services, L.P. ( CFS ), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. NASA Federal Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members. 2

3 STRATEGY #1 Know where you stand today Where does money go? Income Expenses Assets and income Liabilities 3

4 STRATEGY #1 Know where you stand today Are you happy with this picture? Assets Liabilities Total Net Worth 4

5 STRATEGY #2 Be prepared for emergencies Don t wait until there s a crisis! Financial emergencies Medical emergencies Personal emergencies 5

6 STRATEGY #2 Be prepared for emergencies Make life simpler for yourself Complete these worksheets and keep them updated and easily located 6

7 STRATEGY #3 Insure for the unexpected Most people need life insurance 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 7

8 STRATEGY #4 Create a will and estate plan Most people need a will Put your wishes in writing Determine who will inherit what Name a guardian for your children Name the executor of your estate 55% 55% of people do not have a will ¹ 1 Forbes, A Common Sense Approach to Estate Planning, January 19,

9 STRATEGY #4 Create a will and estate plan Estate planning is more 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

10 STRATEGY #4 Create a will and estate plan 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

11 STRATEGY #5 Reduce debt Some credit card facts Average interest rate on personal credit cards is over 12% ¹ Nearly three quarters of American families have a general purpose credit card ² Median credit card balance is $3,000 ² Over 25% of families who hold a credit card hardly ever pay off the balance ² 1 The Federal Reserve Statistical Release, Consumer Credit, January U.S. Census Bureau, Statistical Abstract of the United States,

12 STRATEGY #5 Reduce debt All debt 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 Home Mortgage Rates, The Federal Reserve, Contract Rate on 30-Year, Fixed- Rate Conventional Home Mortgage Commitments,

13 STRATEGY #6 Invest for the long term Growth of $1 over time, Source: ENCORR Software, 2011 Morningstar, Inc. All rights reserved. Used with permission. The 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 S&P 500 Index, an unmanaged, commonly used measure of common-stock total return performance. Corporate bonds are represented by the Ibbotson U.S. Long-Term Corporate Bond Index. Long-term government bonds are represented by the Ibbotson U.S. Long-Term Government Bond Index. Inflation measured by the Consumer Price Index published by the U.S. Bureau of Labor Statistics. Only government securities are guaranteed as to the timely payment of interest and principal. Past performance is no guarantee of future results. It is not possible to invest directly in an index. This data is not intended to represent the performance of any John Hancock mutual fund portfolio. 13

14 STRATEGY #6 Invest for the long term The best time to invest is when the market is open Warren Buffet 14

15 STRATEGY #6 Invest for the long term Investment considerations Your objectives Time frame Risk/reward potential Tax implications Stocks Bonds Mutual funds 15

16 STRATEGY #6 Invest for the long term What is a stock? A stock represents a share of ownership in a corporation, also referred to as equity Your ownership in a pizza company 16

17 STRATEGY #6 Invest for the long term Why invest in stocks? Balance your portfolio Exposure to different types of stocks Benefit of long-term growth potential 17

18 STRATEGY #6 Invest for the long term What is a bond? Lenders/ Bond Buyers Company Bond 6% Interest 30 Years Borrower/ Bond/Issuer Amount of Loan/Bond Electronics Company 18

19 STRATEGY #6 Invest for the long term Why invest in bonds? Income Balance your portfolio Moderate growth potential 19

20 STRATEGY #6 Invest for the long term What is a mutual 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. 20

21 STRATEGY #6 Invest for the long term How a mutual fund 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 a pizza company an electronics company a pharmaceutical company 21

22 STRATEGY #6 Invest for the long term Why invest in mutual funds? Benefits of stocks and bonds plus Professional money management Pooling your money Diversification* Low minimum investment Access to your money *Diversification does not guarantee investment returns and does not eliminate risk of loss. 22

23 STRATEGY #6 Invest for the long term Understanding risk Financial or company risk Market risk Economic risk Inflation risk Interest rate risk Credit risk Currency risk 23

24 STRATEGY #6 Invest for the long term Strategies to reduce risk Diversify your portfolio Dollar-cost average Don t try to time the market Stay disciplined Work with a financial professional 24

25 STRATEGY #7 Asset allocate 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

26 STRATEGY #7 Asset allocate Source: Calculated by John Hancock Funds, LL C using information and data presented in ENCORR Software, 2012 Morningstar, Inc. All rights reserved. Used with permission. The 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. 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. 26

27 STRATEGY #7 Asset allocate The importance of rebalancing By maintaining target allocations, you add discipline to the process Asset allocation and rebalancing add discipline to the investment process, something most investors need. Before establishing an asset allocation or rebalancing program, make sure you understand all the implications. An expert opinion from a source that isn t emotionally involved in the decision, like a financial professional, can be a great help. 27

28 STRATEGY #8 Dollar-cost average Investing at regular intervals helps reduce risks Spreading purchases over high and low price periods helps you accumulate more shares at a lower cost 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 Adds discipline to the process These examples are for illustrative purposes only. Most investments generally fluctuate according to market conditions. Past performance is not a guarantee of future results. 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 among many investors. This may lower the average price you pay for an investment, while lowering the risk of buying at the wrong time. Be aware that dollar cost averaging does not assure a profit or protect against loss in a declining market. Such a plan involves continuous investment in securities regardless of fluctuating price levels. An investor should consider his/her financial ability to continue purchases through periods of low price levels. These examples are hypothetical and are not intended to imply the performance of any specific John Hancock Mutual fund. 28

29 STRATEGY #9 Contribute maximum to retirement plans Saving for retirement is more important than ever! Americans are living longer We retire younger Traditional pensions are fading Social Security won t be enough 29

30 STRATEGY #9 Contribute maximum to retirement plans Contribute to retirement plans Pay yourself first Pre-tax contributions Matching contributions Painless savings Tax deferral 30

31 STRATEGY #9 Contribute maximum to retirement plans Power of tax deferral $800K $700K $600K $500K $400K Tax-deferred 20% Tax rate 40% Tax rate $745,180 $542,461 $401,074 $300K $200K $100K 0 10 Years 20 Years 30 Years This example 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. 31

32 STRATEGY #9 Contribute maximum to retirement plans 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 59½, in addition to regular income taxes. SOURCE: IRS,

33 STRATEGY #10 Seek expert advice Give your financial prosperity the financial attention it deserves Financial consultants or planners Accountants or CPAs Insurance planners Attorneys You might use several of these experts, or all of them, in the course of your lifetime 33

34 STRATEGY #10 Seek expert advice A financial professional can help you: Clarify Your Investment Goals Establish a Financial Plan Regularly Reevaluate Goals and Progress Remain Disciplined 34

35 10 PROVEN STRATEGIES Next steps See where 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 35

36 Questions Peter Cosentino Financial Advisor ext

37 A word about risk 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 monthend, call your financial professional or John Hancock Investments at , or visit our website at jhinvestments.com. John Hancock Funds, LLC MEMBER FINRA SIPC 601 Congress Street, Boston, MA jhinvestments.com NOT FDIC INSURED. MAY LOSE VALUE. NO BANK GUARANTEE. NOT INSURED BY ANY GOVERNMENT AGENCY. MF SD10PROVSEM 10/13 37