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The 30 Minute Round the World Intro to Financial Planning: Bell Helicopter Jason Hull Hull Financial...
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![Page 1: The 30 Minute Round the World Intro to Financial Planning: Bell Helicopter Jason Hull Hull Financial Planning .](https://reader031.fdocuments.in/reader031/viewer/2022032722/56649ce25503460f949adbb8/html5/thumbnails/1.jpg)
The 30 Minute Round the World Intro to Financial Planning:
Bell Helicopter
Jason HullHull Financial Planning
http://www.hullfinancialplanning.com
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Who Is This Presentation For?
• Anyone who doesn’t feel like their personal finances are in a rock solid position
…in other words…
YOU!
http://www.hullfinancialplanning.com
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What Will You Learn?
• Common personal finance mistakes and how to avoid them
• Ideas for how to squeeze that little bit more out of your budget
• Ideas for how to make your business work for you
http://www.hullfinancialplanning.com
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Who Am I?
• Army veteran• Founded and sold a software development
company• Financial planner, CFP® candidate• Personal finance columnist, U.S. News &
World Report
http://www.hullfinancialplanning.com
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Common Personal Finance Mistakes:No Plan
No budget = money controls you• If you don’t have a budget, you’re actually in
the majority (51%) of Americans!*• Don’t overcomplicate– Use a simple spreadsheet– Start with income– Then known “must pay” expenses– Then variable expenses– Don’t forget to save!
http://www.pewsocialtrends.org/2007/02/07/what-americans-pay-for-and-how/306-3/http://www.hullfinancialplanning.com
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Common Personal Finance Mistakes:No Plan
No retirement plan = don’t know if or when you can quit
• 4 out of 10 Americans have no plan besides Social Security*
• 30% say they will have to work into 80s to retire; however, 22.5% between 60-84 report employment disability
• Start with the goal and work backwards – expenses in retirement and how much you have to save to get there
http://www.pewsocialtrends.org/2007/01/04/most-americans-moderately-upbeat-about-family-finances-in-2007/http://www.hullfinancialplanning.com
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Common Personal Finance Mistakes:Risk Management
The risk ostrich = you may be underinsured• Optimism bias affects future thinking• 70% of people over age 65 require long-term care*• 43% of people who need to use their LTC policies are under
age 64• 10.2% of people age 19-64 can’t work because of disability
or poor health• Look at appropriate term life, disability, and long-term care
insurance– If someone tries to sell you something other than term life, make
them show you quantitative aftcast to show superior performance
http://www.longtermcare.gov/LTC/Main_Site/Understanding/Definition/Know.aspxhttp://www.hullfinancialplanning.com
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Common Personal Finance Mistakes:Retirement Saving
If you save, are you saving enough?• Only 51% save for retirement*• 21% of workers covered by 401(k) don’t participate• IRA limits
– $5,500/year/person– $6,500/year/person if age 50 or older
• 401(k)/403(b)/457/TSP limits– Your contribution: $17,500/age 50+ catchup: $5,500– Total contribution (+ employer contrib): $51,000/$56,500
• Set aside money every month so you don’t have to think about it – automate!
• Think about your future self before making a decision on how much to set aside for retirement savings.
http://money.cnn.com/2012/05/10/retirement/saving-retire/index.htmhttp://www.hullfinancialplanning.com
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Common Personal Finance Mistakes:Retirement Saving
http://www.hullfinancialplanning.com
5.00%7.50%
10.00%
12.50%
15.00%
17.50%
20.00%
22.50%
25.00%
27.50%
30.00%
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35.00%
37.50%
40.00%0
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Starting Investing at Age 50
Savings Rate
Retir
emen
t Age
Vs.
5.00%7.50%
10.00%
12.50%
15.00%
17.50%
20.00%
22.50%
25.00%
27.50%
30.00%
32.50%
35.00%
37.50%
40.00%0
102030405060708090
Starting Investing at Age 30
Savings Rate
Retir
emen
t Age
5.00%7.50%
10.00%
12.50%
15.00%
17.50%
20.00%
22.50%
25.00%
27.50%
30.00%
32.50%
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37.50%
40.00%0
102030405060708090
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Starting Investing at Age 40
Savings Rate
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Common Personal Finance Mistakes:Investing Mistakes
Fees and timing are your portfolio’s silent killer• DO NOT PAY FOR LOADS IN MUTUAL FUNDS!• Look at 12-b(1) fees• Trying to time the market = -35.8% performance vs value
cost averaging*• In 2012, 89.8% of actively managed stock funds
underperformed their index counterparts• Depending on trading frequency, it takes between 20-25
years to determine skill vs. luck in investing. Do you have that much time to waste on a gamble?
• Value cost average into INDEX funds with LOW FEES.
http://money.usnews.com/money/blogs/the-smarter-mutual-fund-investor/2012/11/05/herd-behavior-hurts-fund-investorshttp://www.hullfinancialplanning.com
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Common Personal Finance Mistakes:Hopping on the Hedonic Treadmill
Don’t stuff a huge house full of furniture!• Once we graduate from college, we feel like
we’ve “earned” a lifestyle upgrade• We buy – a nice new car– a big house– and rooms full of furniture
• Instead of paying off debt and investing
http://www.hullfinancialplanning.com
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Squeeze More Out of Your Budget
Remove recurring costs you don’t need• Do you need cable TV?– Try Netflix, Hulu, PlayOn, and stations’ websites
• Paying for more cell phone than you need?– Lower minutes– Get Google Voice– Remove landline
• Gym membership you don’t use?– Plyometrics, body weight exercise, home Crossfit
http://www.hullfinancialplanning.com
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Squeeze More Out of Your Budget
Automate your finances• Set up side accounts– Christmas fund– Home/car insurance fund– Roof/car replacement fund
• Have investments automatically withdrawn• Set up automatic bill pays so you don’t have to
remember when to pay them
http://www.hullfinancialplanning.com
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Squeeze More Out of Your Budget
DEBT SUCKS• KILL YOUR DEBT OR IT WILL KILL YOU• 46.7% of American households carry a credit card
balance• Pay absolutely everything you can towards debt
(credit card, personal loan, car loan, mortgage)• Look at total interest payments first before
deciding which one to pay down/off – combines psychology and math
http://www.hullfinancialplanning.com
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Questions From the Audience
How to invest for personal wealth?• Don’t try to hit a 7 run home run• You, statistically speaking, won’t beat the
market over the long run• Fees and loads kill performance• 5% rule – if you want to speculate, do it with
<= 5% of your investable assets
http://www.hullfinancialplanning.com
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Questions From the Audience
Do you have tips for making a budget and sticking to it?
• Keep it relatively simple – the fewer categories, the better
• I use Mint to track spending• Do budget review 1x/month WITH YOUR
SPOUSE (where applicable)• Automate payments, then carry cash
http://www.hullfinancialplanning.com
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Questions From the Audience
Why do you need a financial planner?• Reason #1: Trade money for time. You can spend
hundreds of hours getting answers from reading/Internet or pay to get them applied to your situation.
• Reason #2: You’re not succeeding as a DIY• Reason #3: You’re not really a planner (I don’t mean
financial planner, either)• Reason #4: You have an out-of-the-ordinary situation
(chronic illness, large inheritance, etc.)http://www.hullfinancialplanning.com
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Questions From the Audience
How do you choose a financial planner? How can you really trust them?
• Ask the following:– How are you getting paid?– You’re going to sign a legally binding, fiduciary
contract with me, right?– What is your net worth?– How did you get the net worth?
• CFP, CLU, ChFC certifications goodhttp://www.hullfinancialplanning.com
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Questions From the Audience
Are the 2040, 2050, etc. 401K investments good options?
• Look at– Fees of fund compared to index brethren– TDF 2015 to see equity allocation
• Match to what you want to do– Will you buy annuities at retirement?– Will you invest in equities heavier to try to grow nest
egg?• Reasonable “lazy portfolio” solution
http://www.hullfinancialplanning.com
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Questions From the Audience
Advice on getting out of debt early on or going after the matching contribution.
• As long as you– Have income > expenses– Won’t take on MORE debt– Have sufficient assets outside of retirement
account(s) to tap in emergency• …then contribute up to match first
http://www.hullfinancialplanning.com
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Questions From the Audience
Are there better funds out there to be in versus the company sponsored ones? Leverage the
opportunities available through Fidelity Brokerage Link.
• Yes, but…• Company match means breakeven of globally
optimal funds is a long, long time• 401k more efficient if you plan on retiring early
(age 55 + terminate employment vs. age 59 ½)
http://www.hullfinancialplanning.com
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Questions From the Audience
Roth versus Traditional IRA/401k• Roth = pay taxes now, withdraw tax-free in future• Traditional = tax deduction now, pay ordinary
income tax rate on withdrawals in future• I recommend mixing due to tax efficient retirement
withdrawal strategies, but lean towards Roth where possible
• Front load with Roth, because when AGI > $127k for singles and $188k for married, can’t use Roth IRA. Can still use Roth 401k.
http://www.hullfinancialplanning.com
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Questions From the Audience
Percent of annual income to be putting away into tax deferred savings
• Depends on goals– If planning on working until age 55 or 59 ½, then as much
as possible (subject to IRS limits)– If planning on retiring earlier, will need some taxable
accounts to draw on• If this is the case, roughly (retirement age – current age) / (90 –
current age) is % for taxable accounts
• Can always save more in taxable accounts once you hit IRS contribution limits
http://www.hullfinancialplanning.com
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Questions From the Audience
Do you think that the government will change the Roth advantages or take them away?
Eventually taxing them like social security was not supposed to be.
• I’m not a politician!• I expect changes to Roths eventually• I do not expect retroactive treatment• But maybe not…Roth = taxes now.
http://www.hullfinancialplanning.com
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Questions From the Audience
Recommended books. Paid Investment advising programs that were useful.
• Total Money Makeover by Dave Ramsey (though I don’t agree with his investment or retirement withdrawal advice)
• Think and Grow Rich by Napoleon Hill• Secrets of Closing the Sale by Zig Ziglar• (SHAMELESS SELF-PROMOTION ALERT!) Winning
With Money course by me – coming out in August
http://www.hullfinancialplanning.com
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How to Reach Me
• http://www.hullfinancialplanning.com• [email protected]• (817)476-0584
If you want to read more about the topics in this presentation, go to http://www.hullfinancialplanning.com/bhipres
http://www.hullfinancialplanning.com