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10 FACTORS THAT HIGHLY AFFECT FINANCIAL INDEPENDENCE

10 FACTORS THAT HIGHLY AFFECT FINANCIAL INDEPENDENCE . FEBRUARY 2013. Session Contents. Reality Checks What’s required now The 10 factors Thinking ahead References . Reflection:. “Half of the Leaders I have met don’t need to be told what to do , they need to be told

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10 FACTORS THAT HIGHLY AFFECT FINANCIAL INDEPENDENCE

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  1. 10 FACTORS THAT HIGHLY AFFECT FINANCIAL INDEPENDENCE FEBRUARY 2013

  2. Session Contents • Reality Checks • What’s required now • The 10 factors • Thinking ahead • References

  3. Reflection: “Half of the Leaders I have met don’t need to be told what to do, they need to be told what to stop.” Peter Drucker

  4. Required: • Live on 50% of your Net Salary • Career Transition Package • (1/10 of Annual Salary x Current Age) • Emergency – 3 months’ Consolidated Pay • Earn 80% of your Monthly Pay outside Pay Cheque

  5. Required (Cont’d): • At least six (6) hours a week for contact and • conversation on Domestic Budget i.e. SAVINGS, • SPENDING, DEBT and INVESTMENT. • Debt – Burden ratio and Reverse mortgage. • Economic spider web model

  6. Required (Cont’d): • A Business and Investment Club. • Avoid ANCHOR Effect • Stuart Smalley • Surety position • Buyer’s remorse • Over-optimism • Known Knowns • Known Unknowns • Unknown Knowns • Unknown Unknowns

  7. FACTS OF LIFE: Poor or Not Planning

  8. “Are you like this financially?”

  9. “The greatest glory of living lies not in never falling, but in rising every time you fall.”Nelson Mandela

  10. Is your asset overheating?

  11. 1st Factor (A): 100 men aged 25 started life, they were all ambitious for success. Some came from wealthy families, some were poor; some had just finished school, others had been working for years. LUXURY 1 1 1 1 10 COMFORT 2 10 1 3 1 “These People didn't plan to fail… they failed to plan” BASICS 70 46 0 65 5 CHARITY 30 5 15 34 54 DIED 5 16 20 36 63 20 years Later @ 45 50 years Later @ 75 10 years Later @ 35 30 years Later @ 55 40 years Later @ 65

  12. (B): According to a recent study by a Department ofHealth and Human Services, for every 100 people starting their careers, the following situation exist at age 65 … These people didn’t plan to fail … they failed to plan.

  13. DESTINY … is not a Dream. It is a Decision. (C) Step # 4 Review and update the Plan regularly Step # 3 Initiate a Plan of Action Step # 2 Prioritize those Goals Step # 1 Set Financial Goals • Most people have no specific plan. • They procrastinate during their working years • and don’t ever seem to get around to start to plan • The end result, FINANCIAL FAILURE!!! The longer we wait ... the steeper the climb

  14. 2nd Factor – Hit & Miss Method of SAVING: There are only two (2) Methods of building Financial Independence • The Hit-And Miss Method • Most People Spend First … • and Try to Save Whatever is Left • It’s easy to spend! • And there is generally little or no • money left • The Systematic Planning Method • Few People Save A Definite Amount First … • and Spend The Balance • These people will generally make the • best use of their money left to spend. • Because of the potential for waste in the • first method the systematic savers will • have just as good a lifestyle today and a • better lifestyle tomorrow SAVE SPEND SPEND SAVE Nobody saves to fail but too many of us failed to save.

  15. 3rd Factor – Consumptive Saving: Saving money to spend it on something not worth your while is saving like the Roller Coaster Way. Have you tried saving money in the past to spend it on something … save and spend … save and spend … Sometimes borrow money to spend? Roller Coaster Way of Saving What would you like to happen when you retire? Life Line Financial Independence Started Working Today Ret. Age If you were to save for the next 20 yrs. As you have saved in the past, Do you think it will improve your financial situation? Spending so much today at the expense of tomorrow is a mistaken kindness.

  16. 4th Factor – The Impact of Inflation: History tells us that inflation in here to stay. The staggering effect of inflation causes shocks to the shilling every year! Ush – Dollar Exchange Rate: Because of Inflation; the Power of the Shilling is Diminishing! Dollar Savings or Investments can help hedge against Inflation!

  17. “No one would remember the good Samaritan if all he had were good intentions and NO Money” Margaret Thatcher

  18. 5th Factor – The Effect of Spending, Savings, Credit (Debt) & Investment:

  19. “We spend money we have not earned on things we do not absolutely need to impress people who do not even care” Mike Murdoch

  20. Your Trend Analysis

  21. Income Graph of a successful Salary Earner Earning Phase 0 years Age 25 years Learning Phase Yearning Phase

  22. 6th Factor – Bad Investment: To minimize investment risk, Investments must be diversified. Putting all money in one basket can cause the outright loss of our money. One of the first things we need to understand about investments is that, the greater the rate of return offered, the greater the risk. Wealthy people who can afford to lose some of their capital can take chances in an effort to obtain high rates of return. For most of us, however, this is not a prudent course of actions. There are at least two (2) reasons for this: We simply cannot afford to lose “Hard Earned MONEY” Losses are difficult to overcome So the best strategy may well be to invest for safety first and return, second. Bad investment can cause the outright loss of our MONEY.

  23. “Wealthy people who can afford to lose some of their capital can take chances in an effort to obtain high rate of return. But for most of us who can’t afford to lose hard earned money can invest safely through VARIABLE LIFE INSURANCE POLICY.”

  24. 7th Factor – Procrastination: FINANCIAL SECURITY is a DECISION not a DREAM!!! The reason why we can’t move forward … is because our future is full of the past. Why do most of us can’t do something out of nothing ? Present DECISION Future COMPRESS Past frustrations; heartaches; pains; failures; negative thinking; bad habits; acceptance; concerns; behavior; forgiveness; revenge; marital; financial; laziness; in-laws; pride; envy; sensitivity; Expand Present We say … I will decide tomorrow I will decide later this week I will decide later this month I will decide later this year We Procrastinate!!! frustrations; heartaches; pains; failures, negative thinking; bad habits; acceptance; concerns; behaviour; forgiveness; revenge; marital; financial; laziness; in-laws; pride; envy; sensitivity; If we put back the past into its proper place, what do you have in the future? NOTHING! What can you do with nothing? ANYTHING! NOW The present is a Decision which divide the past from the future Your future, is determined by your commitment to starting the process NOW – not TOMORROW, not NEXT WEEK – but NOW.

  25. 8th Factor Procrastination …can be a very costly decision People will come up with all types of reasons as to why they didn’t do what they said they wanted to. @ 25 We All Procrastinate! US $ 1,000, 000/yr Saving a Million @ 12% return US $ 50,878/yr US $ 12,392/yr US $ 3,700/yr US $ 1,164/yr @ 35 @ 45 @ 55 @ 65 OR is the real reason … that we fail to take the time to organize our financial affairs and then develop a systematic plan that will help us get where we want to be?

  26. 9th Factor - Risks • Early death • Emergency • Disability • Job loss • Long life span • The next generation’s agenda • Divorce • Business failure

  27. Protection against Risk

  28. What does potential future income look like? REAL MONTHLY INCOME (USHS) 1.8 m 20 25 40 55 65 AGE Adopted from LIBERTY

  29. What does potential future income look like? REAL MONTHLY INCOME (USHS) 4.5 m 1.8 m 20 25 40 55 65 AGE

  30. 10th Factor - Mindset Change

  31. Thinking Ahead… EARNING – KNOWLEDGE, SKILLS AND ATTITUDE • Allocate hours for employment earning. • Allocate hours for your OWN earning. • Invest in own business – full risk. • Invest in others business – own shares • Invest in property and other assets.

  32. When it comes to … Balanced Financial Planning • Financial experts recommend the following: • CREATE an Estate of Protection Money (Premature Death and Disability) • BUILD a Foundation of Guaranteed Money • INVEST for Growth to Hedge Against Inflation, AND ONLY AFTER THE FIRST THREE (3) NEEDS ARE SATISFIED. • SPECULATE for Rapid Growth, with Money you can afford to lose.

  33. Online References • Gotcha Capitalism; Bob Sullivan • Stop Getting Ripped off; Bob Sullivan • The Capitalist Nigger; Chika Onyeani • www.living up to 100.com • www. myFICO.com • www.kathleen rehl.com • www.gail van-oxlade.com • www.suzeorman.com • www.kiplinger.com • www.pkmojo.com

  34. Others • “The Richest man in Babylon” George Classon • “The capitalist Nigger” Chika Onyeani • “Stop getting ripped off” Bob Sullivan • “Gotcha capitalism” Bob Sullivan • “In Deep Conversation” PK • “How to skip Retirement” PK • “Key Questions people don’t ask about retirement” PK • “What’s next? How professionals are retiring Retirement” Dona Roche – Tarry and Dale Roche -Lebrec

  35. Thank You &

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