PERSONAL FINANCE - GBV · PERSONAL FINANCE FOURTH EDITION JEFF MADURA Florida Atlantic University...

PERSONALFINANCE

FOURTH EDITION

JEFF MADURAFlorida Atlantic University

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Contents

Preface

Financial Literacy Pre-Test

Chapter 1 Overview of a Financial Plan 3How You Benefit from an Understanding of Personal Finance 4Make Your Own Financial Decisions 4Judge the Advice of Financial Advisers 4Become a Financial Adviser 5

Components of a Financial Plan. 5A Plan forYour Budgeting andTax Planning 5A Plan to Manage Your Liquidity 6A Plan forYour Financing 7A Plan for Protecting Your Assets and Income 7A Plan forYour Investing 7A Plan forYour Retirement and Estate 7How theText Organization Relates to the Financial Plan's Components 8

Developing the Financial Plan 10Step 1. Establish Your Financial Goals 10Step 2. ConsiderYour Current Financial Position 10Step 3. Identify and Evaluate Alternative PlansThat Could Achieve Your Goals. . . . 13Step 4. Select and Implement the Best Plan for Achieving Your Goals*. 13Financial Planning Online 1.1: Financial PlanningTools for You 14Step 5. Evaluate Your Financial Plan 15Step 6. Revise Your Financial Plan 15

Summary 17Review Questions . 17

Financial Planning Problems 18

Financial Planning Online Exercise 19

Video Exercise: Benefits of Financial Planning 19

Building Your Own Financial Plan 20

The Sampsons—a Continuing Case 20

PART 1 TOOLS FOR FINANCIAL PLANNING

Chapter 2 Planning with Personal Financial Statements 28Personal Cash Flow Statement 29Cash Inflows 29

Detailed Contents xi

Cash Outflows 29Creating a Personal Cash Flow Statement 29

Factors That Affect Cash Flows 30Factors Affecting Cash Inflows 30Factors Affecting Cash Outflows 32

Creating a Budget 32Anticipating Cash Shortages 34Assessing the Accuracy of the Budget 34Forecasting Net Cash Flows over Several Months 34Creating an Annual Budget 35Improving the Budget 36Financial Planning Online 2.1: Budgeting Tips 37

/ Personal Balance Sheet 38Assets : 38Financial Planning Online 2.2: The Impact of Reduced Spending 38Financial Planning Online 2.3: Financial Planning Online: Budgeting Advice 39Liabilities 40Net Worth 40Creating a Personal Balance Sheet 40Changes in the Personal Balance Sheet 41How Cash Flows Affect the Personal Balance Sheet 43Analysis of the Personal Balance Sheet 45

How Budgeting Fits Within Your Financial Plan 46Discussion Questions 47

Summary 47

Review Questions *. 48


Financial Planning Online Exercises 50

Video Exercise: Budgeting 51


The Sampsons—A Continuing Case 52

Chapter 3 Applying Time Value Concepts eiThe Importance of the Time Value of Money 62

Future Value of a Single Dollar Amount 62Using the Future ValueTable 63Impact of a Longer Period 64Impact of a Higher Interest Rate 64Using a Financial Calculator 64The Power of Compounding 65

Present Value of a Dollar Amount 66Financial Planning Online 3.1: Paying Your Bills Online 67Using the Present ValueTable . 67

xii Detailed Contents

Using a Financial Calculator 67Impact of Economic Conditions on theTime Value of Money 68

Future Value of an Annuity 68Using the Future Value Annuity Table 69Using a Financial Calculator to Determine the Future Value of an Annuity 70Financial Planning Online 3.2: Estimating the Future Value of Your Savings 71

Present Value of an Annuity 71Using the Present Value Annuity Table 72Using a Financial Calculator to Determine the Present Value of an Annuity 72

Using Time Value to Estimate Savings 73Estimating the Future Value from Savings 73Estimating the Annual SavingsThat Will Achieve a Future Amount 73

How a Savings Plan Fits Within Your Financial Plan 75Discussion Questions 75

Summary 75Review Questions 75



Video Exercise: How Your Savings Grows 78



Chapter 4 Using Tax Concepts for Planning 85Background on Taxes 86Tax Law Changes 86Social Security and Medicare Taxes 87Financial Planning Online 4.1: Internal Revenue Service 87Personal IncomeTaxes 88

Filing Status 88

Gross Income 91Wages and Salaries 91Interest Income 91Dividend Income 91Capital Gains 93Determining Gross Income 93Adjusted Gross Income 93

Deductions and Exemptions 96Standard Deduction 96Itemized Deductions 96Financial Planning Online 4.2: State Income Tax Rates 99Exemptions 99

Detailed Contents xiii

Taxable Income and Taxes 99Taxable Income 99Calculating Taxes 100Tax Credits 102Financial Planning Online 4.3: Estimating Your Taxes 103

How Tax Planning Fits Within Your Financial Plan 104Discussion Questions 106

S u m m a r y 106

Review Questions 107



Video Exercise: Tax Saving Tips 109

' Building Your Own Financial Plan 109


Part 1: Brad Brooks—A Continuing Case 110

PART 2 MANAGING YOUR LIQUIDITY

Chapter 5 Banking and Interest Rates 120Types of Financial Institutions 121Depository Institutions 121Nondepository Institutions 122Financial Conglomerates 123

Banking Services Offered by Financial Institutions . .• 123Checking Services 123Check Float. 125Credit Card Financing 126Debit Cards 126Safety Deposit Boxes 126Automated Teller Machines (ATMs) 126Cashier's Checks 127Money Orders 127Traveler's Checks 127

Selecting a Financial Institution 127Financial Planning Online 5.1: Internet Banking 128

Interest Rates on Deposits and Loans 129Risk-Free Rate 129Risk Premium 129Financial Planning Online 5.2: Financial InstitutionsThat Can Serve Your Needs 129Comparing Interest Rates and Risk 131

xiv Detailed Contents

Term Structure of Interest Rates 131Financial Planning Online 5.3: Current Interest Rate Quotations 132

Why Interest Rates Change 133Shift in Monetary Policy 134Shift in the Government Demand for Funds 134Financial Planning Online 5.4: Updated Treasury Yields 135Shift in the Business Demand for Funds 135Loan Rate 135Financial Planning Online 5.5: Fed's Upcoming Meetings 136

How Banking Services Fit Within Your Financial Plan 137Discussion Questions 138

S u m m a r y 138




Video Exercise: BankingTips , 140



Chapter 6 Managing Your Money 147Background on Money Management 148Liquidity 148Adequate Return 148

Money Market Investments 149Checking Account 149NOW Account 150Savings Deposit 150Certificate of Deposit 151Money Market Deposit Account (MMDA) 152Treasury Bills 152Financial Planning Online 6.1: Interest Rate Data 153Money Market Funds (MMFs) 154Asset Management Account 155Comparison of Money Market Investments 155

Risk of Money Market Investments 156Credit Risk 156Financial Planning Online 6.2: Impact of Different DepositRates on Your Wealth 156Interest Rate Risk 157Liquidity Risk 157

Risk Management of Money Market Investments 158Financial Planning Online 6.3: Identifying Insured Investments 158

Detailed Contents xv

Risk Assessment of Money Market Investments 159Determining the Optimal Allocation of Money Market Investments 159

How Money Management Fits Within Your Financial Plan 161Discussion Questions 162

S u m m a r y 162




Video Exercise: Investing in Money Markets 164



Chapter 7 Assessing and Securing Your Credit 171Background on Credit 172

'"[ Types of Credit 172Advantages of Using Credit 172Disadvantages of Using Credit 173Credit Rights . 173Credit History. . 174Credit Insurance 174Financial Planning Online 7.1: Personal Credit Counseling 174

Credit Bureaus 175Credit Reports Provided by Credit Bureaus 175Credit Score 177Financial Planning Online 7.2: Obtaining a Free Credit Report 177Reviewing Your Credit Report 179

Identity Theft: a Threat to Your Credit 180The Cost of Identity Theft 181

Identity Theft Tactics 181Shoulder Surfing 181Dumpster Diving 181Skimming 182Pretexting, Phishing, and Pharming 182Abusing Legitimate Access to Records 182Crime Rings 182Violating Your Mailbox 182

Protecting Against Identity Theft 183Shielding Personal Information at Home 183Protecting Personal Information at Work 184Identity Theft Insurance 185

Response to Identity Theft 185Financial Planning Online 7.3: Identity Theft 185

xvi Detailed Contents

How Credit Assessment and Security FitsWithin Your Financial Plan 188


Financial Planning Problem 190


Video Exercise: Improving Your Credit 190



Chapter 8 Managing Your Credit 197Credit Cards 198Applying for a Credit Card 198Types of Credit Cards 199Financial Planning Online 8.1: Your Credit Card Report 200Credit Limit 200Overdraft Protection 200Annual Fee 201Incentives to Use the Card 201Prestige Cards 201Grace Period 201Financial Planning Online 8.2: Eliminating Credit Card Debt 202Cash Advances . . 202Financing 202Repayment Calculators 204Impact of the Interest Rate on Credit Payments 204Impact of Financing Period on Credit Payments 204Credit Card Statement 205Financial Planning Online 8.3: Your Rights When Using Credit 207Comparing Credit Cards 207Financial Planning Online 8.4: Selecting a Credit Card 208

Tips on Using Credit Cards 209Use a Credit Card Only if You Can Cover the Bill 209Impose aTight Credit Limit 210Reduce Credit Limit When Economic Conditions Weaken 211Pay Credit Card Bills Before Investing Money 211Financial Planning Online 8.5: Establishing and Protecting Credit 211Pay Off Credit Card Debt Before Other Debt 212Financial Planning Online 8.6: Estimating the Time Necessaryto Pay Off Your Balance 213

Avoid Credit Repair Services 213

Credit Repair Kit 213

How Credit Management Fits Within Your Financial Plan 214Discussion Questions 215

Detailed Contents xvii

S u m m a r y 215




Video Exercise: Tips on Using Credit Cards 217




PART 3 PERSONAL FINANCING

Chapter 9 Personal Loans 226Background on Personal Loans 227Determining Whether a Loan Is Sensible 227Financial Planning Online 9.1: Loan Information 227Sources of Loans 228The Personal Loan Process 228

Interest Rates on Personal Loans 232Annual Percentage Rate 232Simple Interest 232Add-On Interest 234

Car Loans' 235Selecting the Car 235Financial Planning Online 9.2: Prices of New Cars 235Financial Planning Online 9.3: Trade-in and Retail Values of Used Cars 236Financial Planning Online 9.4: Car Loan Interest Rate Quotation 237Negotiating the Price 238Financial Planning Online 9.5: Prevailing Car Loan Interest Rates 239Financing Decisions 240

Purchase versus Lease Decision 241

Financial Planning Online 9.6: Should You Lease or Buy? 242

Student Loans 242

Home Equity Loan 244Credit Limit on a Home Equity Loan 244Financial Planning Online 9.7: Applying for a Home Equity Loan 244Interest Rate 245How Personal Loans Fit Within Your Financial Plan 246Financial Planning Online 9.8: Personal Loan Scams 246

Discussion Questions 247

S u m m a r y 247


xviii Detailed Contents



Video Exercise: Applying for a Personal Loan 251



Chapter 10 Purchasing and Financing a Home 257Selecting a Home 258Relying on a Realtor 258Using Online Realtor Services 258

How Much Can You Afford? 259Affordable Down Payment 259Affordable Monthly Mortgage Payments 259Criteria Used to Select a Home 260Financial Planning Online 10.1: How Much Money Can You Borrow? 260Financial Planning Online 10.2: Recent Sales Prices of Nearby Homes 261Financial Planning Online 10.3: Listing of Homes Nearby for Sale 262

Valuation of a Home 262Market Analysis 262Economic Impact on Market Prices 263Effects of Business Activity and Zoning Laws 263Obtaining a Second Opinion on Your Valuation 264Negotiating a Price 264

Transaction Costs of Purchasing a Home 264Down Payment 264Financial Planning Online 10.4: Applying for a Mortgage 265Closing Costs 265Financial Planning Online 10.5: Mortgage Rates 267

Characteristics of a Fixed-Rate Mortgage 267Amortization Table 267Impact of the Mortgage Amount on the Monthly Payment 268Impact of the Interest Rate on the Monthly Payment 269Impact of the Mortgage Maturity on the Monthly Payment 270Financial Planning Online 10.6: Estimating Mortgage Payments 270Estimating the Monthly Mortgage Payment 271

Characteristics of an Adjustable-Rate Mortgage 272Initial Rate 273Interest Rate Index 273Frequency of Rate Adjustments 273Financial Planning Online 10.7: Should You Obtaina Fixed- or an Adjustable-Rate Mortgage? 273

Caps on Adjustable-Rate Mortgages 274Financing with a Fixed- versus an Adjustable-Rate Mortgage 274

Detailed Contents xix

Decision to Own versus Rent a Home 275Estimating theTotal Cost of Renting and Owning 276

Special Types of Mortgages 279Graduated Payment Mortgage 279Balloon Payment Mortgage 279Interest-Only Mortgage 279

Mortgage Refinancing 279Rate Modification 279Financial Planning Online 10.8: Should You Rent or Buy? 280Refinancing Analysis 280

How a Mortgage Fits Within Your Financial Plan 281Discussion Questions 282

Summary 282Review Questions 283Financial Planning Problems 284Financial Planning Online Exercises 285Video Exercise: Purchasing a Home 286




leisyraince 302Background on Insurance 303

Managing Risk 303Avoid Risk 303Reduce Risk 303Accept Risk 304Insure Against Risk 304Economic Impact on the Decision to Insure Against Risk 304

Role of Insurance Companies 305Insurance Company Operations 305Insurance Company Credit Ratings and Service 306Role of Insurance Agents and Brokers 306Financial Planning Online 11.1: Reviews of Insurance Companies 307

Auto Insurance 307Auto Insurance Policy Provisions 307Coverage A: Liability Coverage 307Coverage B: Medical Payments Coverage 309Coverage C: Uninsured or Underinsured Motorist Coverage 310

xx Detailed Contents

Coverage D: Collision and Comprehensive Coverage 310Other Provisions 311Summary of Auto Insurance Provisions 311Financial Planning Online 11.2: How Much Car InsuranceCoverage Do You Need? 312

Factors That Affect Your Auto Insurance Premiums 313Characteristics of Your Car 313Your Personal Characteristics 313Comparing Premiums among Insurance Companies 314

If You Are in an Auto Accident 317

Homeowner's Insurance 317Types of Perils Covered by Homeowner's Insurance 317

Homeowner's Insurance Policy Provisions 318Property Damage 318Other Structures on Property 319Personal Property 319Liability 319OtherTypes of Expenses 320Expenses Incurred by Homeowner's Insurance Companies 320

Homeowner's Insurance Premiums 320Factors That Affect Homeowner's Insurance Premiums 321Reducing Your Homeowner's Insurance Premium 321Financial Planning Online 11.3: Purchasing Homeowner's Insurance 321

Filing a Claim 322Financial Planning Online 11.4: Renter's Insurance Quotation 323

Renter's Insurance 323

Renter's Insurance Policy Provisions 323

Umbrella Personal Liability Policy 323

How Home and Auto Insurance Fit Within Your Financial Plan 324Discussion Questions 324



Video Exercise: Selecting Auto Insurance 326



DillSty Imsyrasmce 339

Health Insurance 340

Private Health Insurance 340Types of Private Health Insurance Coverage 341

Detailed Contents xxi

Options for Purchasing Private Health Insurance 341Private Health Care Plans 341Premiums for Private Health Care Insurance 343Comparison of Private Health Insurance Plans 343Financial Planning Online 12.1: Should You Enroll in an HMO or a PPO? 344Individual Insurance 345

Contents of Health Care Insurance Policies 345Identification of Insured Persons 345Location 346Preexisting Conditions 346Cancellation Options 346Determinants of Unreimbursed Medical Expenses 346Rehabilitation 347Mental Illness 347Pregnancy 347Renewability Option 347Maintaining Private Health Care Insurance Coverage 347Expenses Not Covered by Private Insurance Plans 347

Government Health Care Plans 348Medicare 348Medicaid 349Financial Planning Online 12.2: Medicare Coverage 349

Long-Term Care Insurance 350Long-Term Care Insurance Provisions 350Other Factors That Affect Long-Term Care Insurance Premiums 351Reducing Your Cost of Long-Term Care Insurance 351Determining the Amount of Coverage » 352

Additional Types of Health Care Plans .352Dental Insurance 352Vision Insurance 352

Disability Insurance 352Sources of Disability Income Insurance 352Disability Insurance Provisions 353Deciding on Disability Insurance 355

How Health and Disability Insurance FitWithin Your Financial Plan 355Discussion Questions 356

Summary 356




Video Exercise: Selecting Health Insurance 357



xxii Detailed Contents

367

Background on Life Insurance 368Role of Life Insurance 368Role of Life Insurance Companies 368

Types of Life Insurance 369Term Insurance 369Financial Planning Online 13.1: Buying Term Life Insurance 373Whole Life Insurance 373Financial Planning Online 13.2: Should You Buy Whole Life or Term Insurance? . . 374Universal Life Insurance 375

Determining the Amount of Life Insurance Needed 376Income Method 376Budget Method 377

Contents of a Life Insurance Policy 379Beneficiary 379Grace Period 379Living Benefits 379Nonforfeiture Clause 380Loans 380Incontestability Date 380Renewability Option 380Conversion Option 380Settlement Options 380Financial Planning Online 13.3: How Much Life Insurance Do You Need? 381

Selecting a Life Insurance Company '. 381OtherTypes of Insurance 381The Specific Policy That You Want 381Services 382Relatively Low Insurance Premiums 382Strong Financial Condition 382

How Life Insurance Fits Within Your Financial Plan 382Discussion Questions 383




Video Exercise: Selecting Life Insurance 386




Detailed Contents xxiii

PART 5 PERSONAL INVESTING

Chapter 14 Investing Fundamentals 396Types of Investments 397Money Market Securities 397Stocks 397Financial Planning Online 14.1: IPOs 398Financial Planning Online 14.2: Price Trends of Your Stocks 399Bonds 400Mutual Funds 400Real Estate 401

Investment Return and Risk 401Measuring the Return on Your Investment 401How Wealth Is Influenced by Your Return on Investment 403Risk from Investing 404

Trade-Off Between Return and Risk 405Return-RiskTrade-Off among Stocks 406Return-RiskTrade-Off among Bonds 406Return-RiskTrade-Off among Mutual Funds 407Return-RiskTrade-Off among Real Estate Investments 407Comparing Different Types of Investments 407

Learning from the Investment Mistakes of Others 408Making Decisions Based on Unrealistic Goals 408Borrowing to Invest 409Taking Risks to Recover Losses from Previous Investments 409

How Investments Fit Within Your Financial Plan 410Discussion Questions 411

S u m m a r y 411




Video Exercise: Investing 414



Chapter 15 Investing in Stocks 419Stock Exchanges 420New York Stock Exchange 420Other Stock Exchanges 421Over-the-Counter (OTC) Market 421Electronic Communication Networks (ECNs) 421

Detailed Contents xxv

Valuing a Bond 446Financial Planning Online 16.3: Today's Events That Could Affect Bond Prices . . . 447

Risk from Investing in Bonds 449Default Risk 449Call Risk 451Interest Rate Risk 451

Bond Investment Strategies 452Interest Rate Strategy 452Passive Strategy 452Maturity Matching Strategy 453

How Bond Decisions Fit Within Your Financial Plan 453Discussion Questions 454

S u m m a r y 454


.•': Financial Planning Problems 455


Video Exercise: Investing In Bonds 457



Chapter 17 Investing In Mutual Funds 463Background on Mutual Funds 464Motives for Investing in Mutual Funds 464Net Asset Value 464Open-End versus Closed-End Funds f 464Load versus No-Load Funds 465Expense Ratios 466

Types of Mutual Funds 467Types of Stock Mutual Funds 467Types of Bond Mutual Funds 469Financial Planning Online 17.1: Index Mutual Funds 470

Return and Risk of a Mutual Fund 471Return from Investing in a Mutual Fund 471Financial Planning Online 17.2: Return from Investing in Mutual Funds 473Risk from Investing in a Stock Mutual Fund 473Trade-Off between Expected Return and Risk of Stock Funds 474Risk from Investing in a Bond Mutual Fund 475Trade-Off between Expected Return and Risk of Bond Funds 476

Selecting Mutual Funds 477Determining Your Preferred Mutual Fund Characteristics 477Reviewing a Mutual Fund's Prospectus 477Financial Planning Online 17.3: Mutual Fund Reports 479Making the Decision 479

xxvi Detailed Contents

Quotations of Mutual Funds 480Financial Planning Online 17.4: Online Services by Mutual Funds 481

Diversification Among Mutual Funds 481Financial Planning Online 17.5: Diversifying among Mutual Funds 482International Diversification of Mutual Funds 483Diversification through Mutual Fund Supermarkets 483

How Mutual Funds Fit Within Your Financial Plan 484Discussion Questions 485

Summary 486




Video Exercise: Investing In Mutual Funds 488



Chapter 18 Asset Allocation 495How Diversification Reduces Risk 496Benefits of Portfolio Diversification 496Determining Portfolio Benefits 497Factors That Influence Diversification Benefits 498Financial Planning Online 18.1: Correlations among Stock Returns 499

Strategies for Diversifying 500Diversification of Stocks across Industries 500Diversification of Stocks across Countries 501

Asset Allocation Strategies 502Including Bonds inYour Portfolio 502Including Real Estate Investments inYour Portfolio 502Including Stock Options inYour Portfolio 503How Asset Allocation Affects Risk 505An Affordable Way to Conduct Asset Allocation 505

Factors That Affect Your Asset Allocation Decision 506Your Stage in Life 506Your Degree of RiskTolerance 507Your Expectations about Economic Conditions 508Financial Planning Online 18.2: Advice on Your Asset Allocation 509

How Asset Allocation Fits Within Your Financial Plan 509Discussion Questions 510

Summary 510




Detailed Contents xxvii

Video Exercise: Asset Allocation 512




PART 6 RETIREMENT AND ESTATE PLANNING

Chapter 19 Retirement Planning 522Social Security 523Qualifying for Social Security 523Social Security Taxes 523Retirement Benefits 524Concern about Retirement Benefits in the Future 524Financial Planning Online 19.1: Request a Social Security Statement 525

Employer-Sponsored Retirement Plans 525Defined-Benefit Plans 525Defined-Contribution Plans 526Financial Planning Online 19.2: Retirement Expense Calculator 527

Your Retirement Planning Decisions 527Which Retirement Plan Should You Pursue? 527How Much to Contribute 527How to Invest Your Contributions 528

Retirement Plans Offered by Employers ; 530401 (k) Plan 530Roth 401 (k) Plan 531403(b) Plan 532Simplified Employee Plan (SEP) 532SIMPLE Plan 532Profit Sharing 532Employee Stock Ownership Plan (ESOP) 532Managing Your Retirement Account after Leaving Your Employer 533

Retirement Plans for Self-Employed Individuals 533Keogh Plan 533Simplified Employee Plan (SEP) 533

Individual Retirement Accounts 533Traditional IRA 533Roth IRA 534Comparison of the Roth IRA andTraditional IRA 534

Annuities 535Fixed versus Variable Annuities 535Annuity Fees 535

xxviii Detailed Contents

Estimating Your Future Retirement Savings 536Estimating the Future Value of One Investment 536Estimating the Future Value of a Set of Annual Investments 538

Measuring the Tax Benefits from a Retirement Account 540Financial Planning Online 19.3: How to Build Your Retirement Plan 542

How Retirement Planning Fits Within Your Financial Plan 542Discussion Questions 543

Summary 543




Video Exercise: Retirement Planning 546



Chapter 20 Estate Planning 553Purpose of a Will 554Reasons for Having a Will 554Creating a Valid Will 554CommonTypes of Wills 554Key Components of a Will 554Financial Planning Online 20.1: Quiz for Preparing Your Own Will 556Changing YourWill 557Executing the Will during Probate 557

Estate Taxes 558Determining Estate Taxes 558Other Related Taxes 558Valuing Your Estate to Assess Potential Estate Taxes 558

Trusts, Gifts, and Contributions 558Trusts 558Gifts 559Contributions to Charitable Organizations . 560

Other Aspects of Estate Planning 560Living Will 560Power of Attorney 560Financial Planning Online 20.2: How to Build Your Estate Plan 560Maintaining Estate Plan Documents 561Financial Planning Online 20.3: Legal Advice on Estate Planning 561

How Estate Planning Fits Within Your Financial Plan 562Discussion Questions 562

Summary 563


Detailed Contents xxix

Financial Planning Online Exercise 564Video Exercise: Estate Planning 564



Part 8; Brad Brooks—A Continuing Case 565

PART 7 SYNTHESIS OF FINANCIAL PLANNING

Chapter 21 Integrating the Components of a Financial Plan 574

Review of Components Within a Financial Plan 575Budgeting \ 575Managing Liquidity 576Personal Financing 576Protecting Your Assets and Income 576Managing Investments 577Retirement Planning 577Maintaining Your Financial Documents 578Financial Planning Online 21.1: Insight about Financial Planning Concepts 579

Integrating the Components 579Budgeting 581Managing Liquidity 582Personal Financing 583Insurance 584Managing Investments 584Protecting and Maintaining Wealth 585

Financial Plan 586Financial Planning Online 21.2: A Synthesized Financial Plan 587

Summary 588Review Questions 589Financial Planning Problems 589Financial Planning Online Exercise 590Video Exercise: Financial Plan 590Certified Financial Planner Exercise 590


A Continuing Case 591

Financial Literacy Post-Test 597

Appendix A Your Career 599

Determining Your Career Path 599Factors That May Affect Your Career Path 599Sources of Information That Can HelpYou SelectYour Career Path 599

xxx Detailed Contents

Getting the Skills You Need 600Training 600Education 601Expanding Your Education 601

Changing Your Career 602Self-Employment 602

Criterial Used to Assess Applicants 602Your Application 602Your Resume 602Your Interview 603

Conclusion 603

Appendix B Projects 605Assessing Your Credit 605

Career Planning Project 606

Information on Career Planning 606

Leasing an Apartment 607

Stock Market Project 608Obtaining Stock Price and Dividend Information 608Enter the Stock Information 609Determine Your Gain over the School Term 609Comparing Your Stock to the General Market 609Team Project 609Comparison Shopping: Online versus Local Purchases ..- 610

Appendix C Financial Tables 6n

Index 621

Credits 645

PERSONAL FINANCE - GBV · PERSONAL FINANCE FOURTH EDITION JEFF MADURA Florida Atlantic University...

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Transcript of PERSONAL FINANCE - GBV · PERSONAL FINANCE FOURTH EDITION JEFF MADURA Florida Atlantic University...