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The Secret To Getting Rich!!

The Secret To Getting Rich!!. The Secret of Becoming Rich!. Save at least 10% of your income and never spend it, but INVEST it. Never spend the principal, but accumulate enough wealth to live off the interest/investment income.

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The Secret To Getting Rich!!

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  1. The Secret To Getting Rich!!

  2. The Secret of Becoming Rich! • Save at least 10% of your income and never spend it, but INVEST it. • Never spend the principal, but accumulate enough wealth to live off the interest/investment income. • Fun Fact! $100 a month saved for 45 years at 14% compound interest is $1,228,800! Anyone can be a millionaire!!!

  3. Would You Rather... • Would you rather I gave you one million dollars today or a penny today and then doubled it every day for 30 days? • $0.01 doubled every day for 30 days = $10,733,418.00

  4. Investment Definitions • Compound Interest: earning interest on the previous interest. The interest must be left in the investment. • Risk: the chance of losing invested money. • Rate of Return: determined by the interest rate and the amount of the investment. • Liquidity: how easily the investment can be turned into cash. • Term: the time after which the interest is paid or the investment no longer pays interest.

  5. Investing Financial Resourcesaka Money

  6. Chequing Accounts • Bank accounts from which cheques can be written. The Canadian Deposit Insurance Corporation (CDIC) covers up to $60,000. • Risk: none • Return: almost none • Liquidity: very high • Term: none

  7. Savings Accounts • Bank accounts used for saving money. The CDIC covers up to $60,000. • Risk: none • Return: very low • Liquidity: high • Term: daily or monthly interest

  8. Term Deposits, Guaranteed Investment Certificates (GIC’s) • Money that is deposited for a set length of time: ie. 1, 2, 3, 4, or 5 years. There is a financial penalty if the money is withdrawn before the agreed upon period. • Risk: low • Return: low to medium, dependent upon length of term • Liquidity: low • Term: 1, 2, 3, 4, or 5 years

  9. Canada Savings Bonds • Bonds (lending money) issued by the federal government at an established interest rate. There are two kinds: one that may be liquidated and on that may not. • Risk: very low • Return: low to medium • Liquidity: low or high, depending on type • Term: 9 years

  10. Mortgages • Lending people money to purchase buildings and/or property. The buildings and/or property are established as collateral. • Risk: low to medium • Return: medium • Liquidity: low (buildings or land must be sold) • Term: up to 35 years

  11. Registered Retirement Savings Plan (RRSP) • Any investments that are at least 80% Canadian are registered with the federal government as an RRSP. In addition to the tax free interest paid by the investment, the government provides a tax credit on the principle equal to the investor’s tax bracket. • Risk: low to high (depending on the investment) • Return: high (because of the tax credit) • Liquidity: low (taxes are paid when withdrawn) • Term: depends on investment

  12. Stock Market • Bonds: lending a company money for an agreed upon interest rate. • Stocks: owning a part of a company. Shares in the company increase in value with the value of the company and the demand for shares. • Risk: medium to high • Return: loss of investment to super high • Liquidity: low to medium • Term: none

  13. Real Estate • Purchasing buildings or property to rent. • Risk: medium to high • Return: medium to high • Liquidity: very low • Term: none

  14. Gold, Silver & Collectibles • Purchasing valuable commodities that increase in value over time. • Risk: medium to high • Return: low to medium • Liquidity: low to medium • Term: none

  15. Mutual Funds • Money pooled by many investors in a mutual fund company of professional financial experts who research the stock and bond markets to invest in a particular sector. There are bond funds (low risk), balanced funds (medium risk) and equity funds (high risk). • Risk: medium to high • Return: low to high • Liquidity: medium (takes about a week to liquidate) • Term: three year minimum is recommended

  16. Pyramid Of Investment Risk • If you had $10,000 to invest, which of the options would you choose, or would you divide the money into several investments? • Approx. $2000 in low risk, $4000 in medium risk, and $4000 in high risk is a good choice for a young person. The older you get, the less risk you should take. • It would be imprudent to put all $10,000 into one investment, especially a high risk one.

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