Building A Financial Foundation

BUILDING A FINANCIAL FOUNDATION 1

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BUILDING A FINANCIAL FOUNDATION 2

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ITY THE WEALTH FORMULATHE WEALTH FORMULA

Money+ Time

+/- Rate of Return

- Inflation- Taxes

You can build a successful financial future!

Wealth

BUILDING A FINANCIAL FOUNDATION 3

DO

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T! THE X-CURVE CONCEPT OF

WEALTH & RESPONSIBILITY

You must take care of your responsibilities while building your wealth.

This concept theorizes that a person’s responsibilities generally decrease and wealth generally increases over time.

THE X-CURVE

BUILDING A FINANCIAL FOUNDATION 4

WE

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ITY SAVE EARLY

MR. START EARLY saves $3,600 per year for 7 years in an 8% tax deferred account.

Procrastination is one of the main causes of failure.

MR. WAIT LONGERstarts saving $3,600 per year for 17 years in an 8% tax deferred account, 7 years later than Mr. Start Early.

BUILDING A FINANCIAL FOUNDATION 5

PA

Y Y

OU

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ELF

FIR

ST SMALL CHANGES,

BIG MONEY

Discipline and consistency are the keys.

What if you can make small changes in your spending habits and start saving $10/day ($300/month)?

$300/MONTH AT 8% IN 30 YEARS2

$447,107

$600/MONTH AT 8% IN 30 YEARS2

$894,214

Can you cut down on the following:• Sodas • Cigarettes • Lattes • Cable TV • Games • Bottled Water • Sweets •

New Gadgets • Shopping • Driving a Big Car • Eating Out • Partying ...

2 All figures are for illustrative purposes only and do not reflect an actual investment in any product. Additionally, they do not reflect the performance risk, expenses or charges associated with an actual investment. Past performance is not an indication of future results.

BUILDING A FINANCIAL FOUNDATION 6

DO

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T! THE POWER OF COMPOUNDING

INTEREST

The difference between $10,000 at 4% versus 12% is $600,000. $600,000 is equivalent to 20 years salary of a person who works at an

annual salary of $30,000.

THE RULE OF 72

BUILDING A FINANCIAL FOUNDATION 7

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THE EFFECT OF TAXES &

INFLATIONON YOUR PURCHASING POWER:

EXAMPLE 1:If you save.................$1,000.00at 3% Interest............+ 30.00Pay Tax at 25%......... - 7.50(Combined Fed & State)….. ________

Net After Tax..............$1,022.50Inflation at 3.5%….....- 35.00Actual Return.............$ 987.50

(After Tax & Inflation)

EXAMPLE 2:If you save.................$1,000.00at 5% Interest............+ 50.00Pay Tax at 25%......... - 12.50(Combined Fed & State)….. ________

Net After Tax..............$1,037.50Inflation at 3.5%….....- 35.00Actual Return.............$1,002.50

(After Tax & Inflation)

You must get

about 5% or morein interest to beat

taxes and inflation.

You Lose!

BUILDING A FINANCIAL FOUNDATION 8

Are youwinning or losingthe money game?

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THE COST OF LIVING IN THE UNITED STATES IN 1978

Average Income Per Year: $17,000

Average Cost of a New House: $54,800

Average Rent: $260

Cost of a Gallon of Gas: 63 cents

Dozen Eggs: 48 cents

Average Cost for a Chevrolet Nova: $3,823

BUILDING A FINANCIAL FOUNDATION 9

BE

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IN IN

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IME KNOW THE RISKS

Let’s do some Math. Mr. A and Mr. B both have $100 to invest. In the following scenarios, who ends up doing better?

Mr. A Mr. BYear 1: +40%+10%Year 2: -20%+10%

Net: 20% 20%

SCENARIO 1:

Mr. A Mr. B$140 (100+40)$110 (100+10)$112 (140-28)

$121 (110+11)

$112 vs. $121

Result:

Mr. A Mr. BYear 1: +50% +0%Year 2: -50% +0%

Net: 0% 0%

SCENARIO 2:

Mr. A Mr. B$150 (100+50)$100 (100+10)$75 (100-75) $100

(100+10)

$75 vs. $100

Result:

BUILDING A FINANCIAL FOUNDATION 10

Client 1 Client 2

D EBT _______ _______

I NCOME _______ _______

MORTGAGE _______ _______

E DUCATION _______ _______

TOTAL: _______ _______

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Y PROTECT YOUR FAMILYTHE DIME METHOD

Combined credit cards,

loans and other debts.D EBT $ 50K $3K/mo. ($36K/yr.) income replacement for

10 years. I NCOME $360KMortgage balances.

MORTGAGE $200KAssuming $15K/yr. for a 4-year college for 2 kids.

E DUCATION $120KProtection NeededProtection Needed

TOTAL: $730K

BUILDING A FINANCIAL FOUNDATION 11

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Y THE ODDS OF LIFE BEFORE AGE 65

AgeDeathvs.Disability25 24.1% 34.8%30 23.5% 33.1%35 22.8% 31.3%40 21.8% 29.1%45 20.4% 26.3%50 18.3% 22.6%55 14.9% 17.6%60 9.3% 10.6%

BUILDING A FINANCIAL FOUNDATION 12

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Y WHAT IS YOUR FAMILY’SMOST IMPORTANT ASSET?

• Your house?

• Your cars?

• Your valuables?

It’s You!!!It’s your ability to generate

income!

BUILDING A FINANCIAL FOUNDATION 13

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PR

IOR

ITY BUILDING A SOLID

FINANCIAL FOUNDATION

Like building a house,you must build it

from the ground up.

Build it right.

Build it strong.

INVESTMENT

EMERGENCY FUND

DEBT MANAGEMENT

PROTECTION

BUILDING A FINANCIAL FOUNDATION 14

Scenario 2

Pay a Little Morethan Minimum: $145/month

Time Pay: Less than 4 years

TotalInterest Paid: About $1,600

PAY MORE THAN THE MINIMUM, REDUCE YOUR DEBT SOONER.

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PR

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ITY MANAGE YOUR DEBT

Scenario 1

Pay Minimum(2.5% per month):$112.50/month

Time Pay: Over 25 years

TotalInterest Paid: Over $6,000

Control your debt or your debt will control you.

Example: $4,500 Credit Card BalanceInterest Rate 18%

BUILDING A FINANCIAL FOUNDATION 15

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PR

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ITY CREATE AN EMERGENCY FUND

You should set aside 3-6 months income to help cope with emergencies and unexpected changes:

• Job Loss

• Major Damages or Repairs for Homes, Business Properties, Cars, etc.

• Illness

• Disaster

• Be Prepared for the Rainy Days.

BUILDING A FINANCIAL FOUNDATION 16

GE

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OW MANAGE GROWTH

The 4 Cornerstones of a Strong Financial Future:

YOUR FINAL TEST

Can it potentially GROW

to achieve your goal?

Is it SAFE enough?Does it have TAX ADVANTAGES?Does it have the properPROTECTION for your family?

Your Plan for the Future:

REDUCEYOURDEBT

REDUCEYOURDEBT

PAYYOURSELF

FIRST

PAYYOURSELF

FIRST

MAKEMORE

MONEY

MAKEMORE

MONEY

BUILDUP

EQUITY

BUILDUP

EQUITYPRESERVE YOUR

ESTATEPRESERVE YOUR

ESTATE

Build it with confidence.

BUILDING A FINANCIAL FOUNDATION 17

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U.S.:World Financial Group, Inc. (WFG) is a financial services marketing company whose affiliates offer life insurance and a broad array of financial products and services. Securities offered through Transamerica Financial Advisors, Inc. (WGS), Member FINRA/SIPC. Insurance products are offered through World Financial Group Insurance Agency, Inc. (WFGIA) or its subsidiaries. In California such services are provided under the name World Financial Insurance Agency, Inc. WFG, WGS and WFGIA are affiliated companies. Headquarters: 11315 Johns Creek Parkway, Johns Creek, GA 30097-1517, PO Box 100035, Johns Creek, GA 30096-9403. Phone: 770.453.9300.

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