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Planning Your Financial Future

Lesson 21. Planning Your Financial Future. Slide 21.1. Lesson 21 – Planning Your Financial Future. A World of Risk. Risk of principal: The risk that some or all of the original deposit or investment may be lost.

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Planning Your Financial Future

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  1. Lesson 21 Planning YourFinancial Future

  2. Slide 21.1 Lesson 21 – Planning Your Financial Future A World of Risk Risk of principal: The risk that some or all of the original deposit or investment may be lost. Market risk: The risk that the forces of supply and demand or unforeseen events may affect the value of an investment. Interest-rate risk: The risk that interest rates will change. An investor, for example, might hold a fixed-rate investment, such as a bond. If the bond holder decides to sell the bond before maturity and market interest rates are higher than what the bond is earning, the price of the bond will be lower. Inflation risk: The risk that the return on an investment will not keep pace with inflation, and the saver’s purchasing power will fall.

  3. Slide 21.2 Lesson 21 – Planning Your Financial Future Risk Pyramid

  4. Slide 21.3 Lesson 21 – Planning Your Financial Future Elements of a Financial Plan Financial goals Net worth statement Income and expense statement Insurance plan Saving and investment plan

  5. Slide 21.4 Lesson 21 – Planning Your Financial Future Important Things to Know about Your Clients How much does the client have in savings? Is the client able to save some money each month without borrowing? Is the client responsible for people who are financially dependent? How much risk is the client willing to take in order to pursue a higher rate of return? How close is the client to retirement? Does the client expect his or her savings to generate current income? Is the client primarily hoping for growth? Would the client benefit from tax-deferred or tax-exempt investments?

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