GROW YOUR MONEY WITH JONATHAN POND

PBS finance guy shares some tips to grow your money.

How Great Wealth is Created
Four (Legal) Ways to Create Wealth

• Marry it - Marriage may be grand, but divorce is about a hundred grand.
• Inherit it
• Win the lottery
• Live beneath your means

On budgeting:
Nobody was ever meant
To remember or invent
What he did with every cent.
- Robert Frost

My problem lies in reconciling my bross habits with my net income.
- Errol Flynn

Oh money, money, money!!
I often stop to wonder
How thou canst go out so fast
When thou comest in so slowly.
- Ogden Nash

The Key to Creating Wealth: Postponing Income Taxes

• Contributing to retirement plans
• Tax smart investing outside retirement plans
• Investing in real estate (including a home)
• Starting a business

It's All About Retirement
Retirement: That's when you return from work one day and say, "Hi, honey, I'm home - forever."
- Gene Perret

I've got all the money I'll ever need if I die by four o' clock.
- Henny Youngman

• Choose investments carefully
• Increase your savings each year
• Avoid financial disasters
• Put time on your side
• Find out where you stand
• Don't become discouraged

Quiz
Most investors earn about 4% annual return on their investments. If an investor averages an 8% return and holds on to the money for 20 years before withdrawing it for retirement, how much more income will the investor be able to enjoy from the money?
A. 25%
B. 50%
C. 75%

This is a trick question. None of the choices is correct. The answer is 110%.

Family Money Matters

• Money Matters of Importance for Your Parents
• Health care
• Insurance
• Housing
• Day-to-day money concerns

Resources for Senior Citizens and Their Families
U.S. government resources for seniors
National Association of Area Agencies on Aging
AARP

The Younger Generation
Helping the Younger Set Become Financially Responsible

• Set a good example
• Talk about money

Where I was brought up we never talked about money because there was never enough to furnish a topic of conversation.
- Mark Twain

• Set limits

If you want a kitten, start off by asking for a horse.
- Naomi, Age 15

• Help them prepare for retirement

Your Spouse or Partner
An Intractable Problem?
Spenders are attracted to savers - and vice versa.

If Your Loved One is a Spender . . .
Not everyone wants to be a millionaire: Many are content just to live like one.

If Your Loved One is a Saver . . .
Misers may be tough to live with, but they make great ancestors.

Becoming a Successful Investor
Investment Tutorial

Temporary Investments

• Stable value
• Interest income varies

Bonds

• Fixed interest income, principal varies

Bond prices rise and fall. As interest rates go up, bond prices go down and vice versa.

Stocks

• Growth of Capital

Taking No Risk With Your Investments is Risky
Growth of $100,000 Over the Past 10 Years (including Internet bubble crash)

• No risk US Treasury Bills $145,000
• "Risky" stocks $240,000

Don't gamble! Take all your savings and buy some good stock and hold it 'til it goes up, then sell it. If it don't go up, don't buy it.
- Will Rogers

Diversifying Your Investments
Step 1: Divvying Up Your Money Between Stocks and Bonds

• It all depends . . .
• How your age influences the way you invest

Example
Stocks 60%
Bonds 40%

Step 2: Divvying Up Stock & Bond Money

Stock Allocation Example
Large companies 25%
Small & mid-sized companies 15%
International companies 20%

Bond Allocation Example
U.S. government 15%
Municipal 10%
Corporate 15%

Big Ticket Items

• Home
• College

Save for College & Retirement in the Same Account

Knowledge accumulates in universities, because the freshman bring a little in and the seniors take none away.

• Income Taxes

THE IRS = THEIRS

It has often been said that the only two certainties in life are death and taxes. But at least death doesn't get worse every time Congress convenes.

Sensible Car Ownership

• Frequent traders buy used
• Long-term holders buy new

The only way to solve the traffic problems of the country is to pass a law that only paid-for cars are allowed to use the highways.
- Will Rogers

Top Five Reasons You Know It's Time to Trade in Your Car
#5 - Instead of an air bag, there is a whoopee cushion taped to your steering wheel
#4 - For a 15-minute job, Jiffy Lube needs to keep your car for 3 days
#3 - Thieves repeatedly break into your car just to steal "The Club"
#2 - Traffic reporters start referring to you by name when discussing morning tie-ups
#1 - While sitting at a stoplight, people keep running up to you and asking if anyone was hurt

Using Debt to Your Advantage
Borrowing is Essential
Borrow Only for Things That Will Benefit You In the Future

It saves a lot of trouble if, instead of having to earn money and save it, you can just go and borrow it.
- Winston Churchill

Three Worthwhile Reasons to go into Hock
1. A Home
2. Education
3. Sensible Home Improvements

If medical science continues to prolong life, some of us may eventually pay off the mortgage.

Need a Short Term Loan? Borrow From Your IRA (1x per year, must re-deposit within 60 days)

Covering All Your Bases

• Common Gaps in Property Insurance Coverage
• Personal liability
• Replacement cost
• Valuables
• Natural disasters
• Safe deposit box

Never lend your car to anyone to whom you have given birth.
- Erma Bombeck

Ways to Save on Insurance

• Shop for lower premiums
• Eliminate unneeded coverage
• Increase deductibles

Is it Time to Trade in Your Term Life Insurance Policy?

I owe much; I have nothing; the rest I leave to the poor.
- Francois Rabelais

Where there's a will, I want to be in it.

All-in-One Investments
Consider All-In-One Investments

• Diversifies across several important investment categories
• Holds solid investments that are actively managed
• Regularly rebalances your holdings

All-In-One Investment Menu

• Balanced Funds
• Lifestyle Funds
• Target Date Funds
  

All-In-One Investments

• Get it and forget it, no-brainer investments
• Likely to do better than most can do on their own
• Do your homework, though

Getting Rich Is Boring

• Eliminate debt
• Maintain adequate insurance
• Find ways to reduce spending
• Build up and diversify your investments
• Own a home

Learn from the mistakes of others; you can't live long enough to make them all yourself.
- Eleanor Roosevelt

The Tortoise Beats the Hare: Getting Rich Slowly
The $100 Road to Riches
Save $100 per week and increase savings rate by 5% per year.
Savings Period Amount in the Kitty
10 years = $95,000
20 years = $400,000
30 years = $1,200,000
40 years = $3,800,000

Thriving After You Retire

• Making Sure You Never Run Out of Money
• Invest on your own vs. annuity
• Not an "either/or" decision
• The solution might be some of both

I advise you to go on living solely to enrage those who are paying your annuities. It is the only pleasure I have left.
- Voltaire

Roth IRA Conversions for All . . . Revision in 2010
No income limitation to convert.

Savoring The Good Life - New and Later
Never take financial responsibility for anything that eats.

Financial Drags
#3 Pets
#2 Spouses, partners, girlfriends and boyfriends
#1 Children

My hair stands on end at the cost and charges of these boys. Why was I ever a father! Why was my father ever a father!
- Charles Dickens

Simplifying Your Financial Life

• Set your records straight
• Get rid of unnecessary papers
• Maintain a household inventory
• Consolidate your accounts
• Bank online

It's Time to Indulge Yourself

What's Your Pleasure?

• Nice home
• Vacation home
• Expensive furnishings
• Late model car
• Exotic vacations
• Fancy clothes and jewelry

And in the end it's not the years in your life that count. It's the life in your years.
- Abraham Lincoln