If You''''re Clueless About Financial Planning and Want to Know More pptx

cover next page > title: If You're Clueless About Financial Planning and Want to Know More author: Godin, Seth.; Parmalee, John. publisher: Kaplan Publishing isbn10 | asin: 0793129885 print isbn13: 9780793129881 ebook isbn13: 9780585226002 language: English subject Finance, Personal. publication date: 1998 lcc: HG179.G634 1998eb ddc: 332.024 subject: Finance, Personal. cover next page > < previous page page_i next page > Page i If You're Clueless about Financial Planning and Want to Know More Seth Godin John Parmelee < previous page page_i next page > cover next page > title: If You're Clueless About Financial Planning and Want to Know More author: Godin, Seth.; Parmalee, John. publisher: Kaplan Publishing isbn10 | asin: 0793129885 print isbn13: 9780793129881 ebook isbn13: 9780585226002 language: English subject Finance, Personal. publication date: 1998 lcc: HG179.G634 1998eb ddc: 332.024 subject: Finance, Personal. cover next page > < previous page page_ii next page > Page ii If You're Clueless about Financial Planning and Want to Know More This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in the rendering of legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Editorial Director: Cynthia A. Zigmund Managing Editor: Jack Kiburz Interior and Cover Design: Karen Engelmann © 1998 by Seth Godin Productions, Inc. Published by Dearborn Financial Publishing, Inc. ® All rights reserved. The text of this publication, or any part thereof, may not be reproduced in any manner whatsoever without written permission from the publisher. Printed in the United States of America 98 99 00 10 9 8 76 5 4 3 2 1 Library of Congress Cataloging-in-Publication Data Godin, Seth. If you're clueless about financial planning and want to know more / Seth Godin, John Parmelee. p. cm. Includes index. ISBN 0-7931-2988-5 1. Finance, Personal. I. Parmelee, John. II. Title. HG179.G634 1998 332.024-dc21 98-30390 CIP Dearborn books are available at special quantity discounts to use as premiums and sales promotions, or for use in corporate training programs. For more information, please call the Special Sales Manager at (800) 621-9621, ext. 4514, or write to Dearborn Financial Publishing, Inc., 155 North Wacker Drive, Chicago, IL 60606-1719. < previous page page_ii next page > < previous page page_iii next page > Page iii Other Clueless books by Seth Godin: If You're Clueless about Mutual Funds and Want to Know More If You're Clueless about Retirement Planning and Want to Know More If You're Clueless about Saving Money and Want to Know More If You're Clueless about the Stock Market and Want to Know More If You're Clueless about Insurance and Want to Know More If You're Clueless about Starting Your Own Business and Want to Know More If You're Clueless about Accounting and Finance and Want to Know More (with Paul Lim) If You're Clueless about Getting a Great Job and Want to Know More (with Beth Burns) If You're Clueless about Selling and Want to Know More < previous page page_iii next page > < previous page page_v next page > Page v Acknowledgments Thanks to Jack Kiburz and Cynthia Zigmund at Dearborn for their invaluable editorial guidance; Karen Watts, who created the Clueless concept; and Laura Spinale who pulled it all together. Thanks, too, go to Linda Carbone and the rest of the crew at SGP for their never-ending insight and hard work. < previous page page_v next page > < previous page page_vii next page > Page vii Contents Chapter One: Getting a Clue about Financial Planning 1 Chapter Two: How Is Your Money at Risk? 15 Chapter Three: Your Cash and Investments 39 Chapter Four: Your College Investments 79 Chapter Five: Your Retirement Investments 99 Chapter Six: Health Insurance and Disability Insurance 121 Chapter Seven: Your Assets 141 Chapter Eight: Money for Your Heirs: Estate Planning 159 Chapter Nine: Your Money Online 177 Chapter Ten: Wrapping It Up 189 Glossary 199 Resources 203 Index 207 < previous page page_vii next page > < previous page page_1 next page > Page 1 Chapter One Getting a Clue about Financial Planning This book is written for you if you're wondering if you're making the right choices about your money. Maybe you have a job that pays good money, a family, a car, and a homethe whole American dream. Or maybe you're starting up a business of your own and trying to find the funds to make it successful while still providing for your family. Or maybe you're trying to pay off a mortgage while at the same time saving money to go back to school to boost your career. Or maybe you'd love to play the stock market but don't know where to get solid investment information. < previous page page_1 next page > < previous page page_2 next page > Page 2 What Are the Stakes? No matter which scenario best fits your life there is one reality we all face: We have to be smart about the way we save and invest the money we makebecause no one else is looking out for us. No one. For example, when it comes time to retire, many Americans will not be guaranteed the same financial safety net that current retirees enjoy. Each generation will be affected differently. Twentysomethings will be hit the hardest, followed by the Baby Boomers. Either way, by the early part of the next century, Social Security, the federal retirement fund, will not exist in the way it does today; neither will Medicare, the national health care program for the elderly. The U.S. Department of Health and Human Services projects that Medicare's hospital insurance fund will be insolvent in 2002. And government forecasters predict that the Social Security retirement fund will be empty by 2029. That's right, empty. Both Congress and the president are currently searching for ways to reform these programs, either by cutting costs and/or increasing revenues. That may mean increasing the age of eligibility. That may mean some means-testing. That may mean decreasing benefits. Or it may mean some combination of the three. In any event it definitely means you'll have a greater financial responsibility to take care of yourself. Why are we talking about issues like retirement when it might seem so far away? There are two easy reasons, and they make up the core of why you need to read this book. Reason number one: If you ever hope to achieve the kind of financial security needed for retirement, the time to start saving is now. You also need to start investing now, even if all you can contribute is $50 a month. That's okay. There are plenty of investment opportunities for that little a price. Reason number two: You have to start thinking long-term. You're not a kid anymore. Why You Need to Protect Your Money You work hard. Maybe you know how to save what you make, and perhaps you're even learning how to invest it so that your nest egg grows and your retirement pic- < previous page page_2 next page > < previous page page_3 next page > Page 3 ture is shaping up. Be proud of yourself that you've started to build your financial future. But you can't stop now. Just as there are forces of nature such as earthquakes and fire that threaten your personal security, there are life forces such as divorce, economic downturn, financial setbacks, lawsuits, and the IRS that threaten your well-being. And you need to be aware of these threats so you can take steps to safeguard yourself and your family. Protection Advice Asset protection is not just for the rich. You have more to shelter than you realize. In fact, you are likely part of one of the three economic groups that especially need to watch out for their personal finances: the financially comfortable upper middle class, the middle class, and those just struggling to pay their monthly bills. This book is not written for the rich, who can well afford an army of expensive tax attorneys, financial advisers, and other experts to help steer their money out of harm's way. The good news for you is that today much of the saving and investing advice that used to be reserved for the wealthy can be accessed from a number of inexpensive sources: books, magazines, newspapers, even the Internet. It's also important to remember that the best financial advice is simple, free, and hasn't changed in 50 years: • Define what financial success means to you and then chart a course to meet those goals. • Don't live someone else's definition of success. • Start early (that means now!) with saving and investing your money and let the power of time and compounding work for you. • Pay off your debts before the power of time and compounding works against you. • Make saving and investing a habit. < previous page page_3 next page > [...]... okay to get rich slowly • If an investment sounds too good to be true, keep your hands on your wallet and don't let go • Diversify • Stay within your risk tolerance • Don't put your money into anything you don't understand Who Needs to Protect Money? If you're lucky enough to find yourself in the upper middle class, and you have assets like stock and bond investments, a house, and a car, you know you... case to a creditor if you're applying for a loan or a credit card But if one of you likes to live more extravagantly than the other, your best bet is to get separate accounts That means you'll have your own credit history (and individual credit report), and you alone will be responsible for your spending sprees Even if you go this route, it's still wise to consult your sweetheart if you're about to make... your money from these dangers Your estate It's never too early to start estate planning Your family needs the money more if you die young than if you live to a ripe old age Keep as much of it intact as you can by providing life insurance, making a will, setting up trusts, and gifting Learn how to protect your money for the people you want to leave it to < previous page page_13 next page > < previous page... was 12, and he loves to play the stock market His financial needs are quite different from Song's; he has no dependents, and subsequently he has much more of an ability to take financial risks < previous page page_10 next page > < previous page page_11 next page > Page 11 Michael is heavy into stocks, with about 70 percent of his investments in equities and around 30 percent in bond mutual funds and cash... difficult to think of it as a risk to your money But if you're married, or if you're planning to walk down the aisle with your sweetheart, you should be aware of a few potential problemsand their solutions When it comes to love and money, opposites really do attract You and your honey may be of one mind when it comes to issues like career goals and children, but have you ever had a real discussion about. .. it's easier to map out < previous page page_26 next page > < previous page page_27 next page > Page 27 a strategy to pay down debt That should avoid financial surprises early in the marriage and the bickering that can result You may also want to consider keeping separate bank accounts and credit cards Some couples want to be truly together, both spiritually and financially That's fine if it works for... Investments The stock market gives your money that extra earning power with the promise of higher interest But stocks are susceptible to all kinds of uncertainties and the earnings will be taxed You need to diversify and investigate the international landscape and alternative investments such as tax-free bonds, gold, and even art and collectibles Nest eggs for college and retirement If you have kids,... investment?" If the caller tells you there's no risk, hang up the phone Remember, all investments have risks If he doesn't know that, he may not be a con artist, but he's still too stupid to handle your money • "What government or industry regulatory supervision is your company subject to? " This question raises a red flag with swindlers The last thing they want is to have to deal with regulators < previous... bureaus generally have a month to investigate the charges and then mail you a copy of their findings If they rule in your favor, the bureaus must correct their reports and, if you ask, notify anyone who has recently requested your report If the bureau refuses to change its report, you have the right to add a brief statement to your file explaining the nature of the dispute And if you can't get justice from... buy auto insurance policies that will pay $100,000 to $300,000 to settle a claim There is also homeowner's insurance and so-called umbrella policies that kick in if you end up having to pay out more than is covered by the standard auto or home policy You can take a closer look at these insurance issues later in the book Love and Marriage There are so many positive things about marriage that it's difficult . Godin: If You're Clueless about Mutual Funds and Want to Know More If You're Clueless about Retirement Planning and Want to Know More If You're Clueless about Saving Money and Want to. Money and Want to Know More If You're Clueless about the Stock Market and Want to Know More If You're Clueless about Insurance and Want to Know More If You're Clueless about Starting. Business and Want to Know More If You're Clueless about Accounting and Finance and Want to Know More (with Paul Lim) If You're Clueless about Getting a Great Job and Want to Know More (with