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Point of Choice TM The Point of Choice TM. Point of Choice TM The day you have the choice whether or not to work for income because your financial assets.

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Presentation on theme: "Point of Choice TM The Point of Choice TM. Point of Choice TM The day you have the choice whether or not to work for income because your financial assets."— Presentation transcript:

1 Point of Choice TM The Point of Choice TM

2 Point of Choice TM The day you have the choice whether or not to work for income because your financial assets will provide more income than youll need The Point of Choice TM

3 Point of Choice © Financial Assets Unearned Income Assets That Increase In Value Stocks Realized Capital Gain - Interest - Dividend Real Estate Bonds/CD/Savings What Are Financial Assets? Living Expenses Forever! (Capital Assets) - Rent Notes - Income The Point of Choice TM

4 Age Years to POC Required Assets at POC BeginningIncome $50,000 a Year Income Inflation Assumption = 4% $1,250,000650$50,000 Inflation–4% $50,000$ 2,000 1$ 52,000$ 2,080 2$ 54,080$ 2,163 3$ 56,243$ 2,249 4$ 58,492$ 2,339 5$ 60,832 Year Point of Choice © The Point of Choice TM

5 $1,500,000 Age 50 60 40 30 20 5 15 25 35 45 $2,300,000 $3,300,000 $4,900,000 $7,300,000 $60,000 $90,000 $133,000 $197,000 $292,000 Years to POC Required Assets at POC BeginningIncome $50,000 a Year Income Inflation Assumption = 4% $1,250,000650$50,000 Point of Choice © The Point of Choice TM

6 $3,000,000 Age 50 60 40 30 20 5 15 25 35 45 $4,600,000 $6,600,000 $9,800,000 $14,600,000 $120,000 $180,000 $266,000 $394,000 $584,000 Years to POC Required Assets at POC BeginningIncome $100,000 a Year Income Inflation Assumption = 4% $2,500,000650$100,000 Point of Choice © The Point of Choice TM

7 4 Point Of Choice Steps For ANYONE Point of Choice © Point of Choice © Point of Choice © The Point of Choice TM

8 $250,000 Median Home Price $24,306 $2,571,429 40 Years From Now 40 Years Ago Point of Choice © Point of Choice © Option 1 – Home The Point of Choice TM

9 Home Compounding Assumptions: Home Value = $ 250,000 Annual Growth = 6% The Point of Choice TM

10 Home Compounding Assumptions: Home Value = $ 250,000 Annual Growth = 6% 1. 265,000 2. 280,900 3. 297,750 4. 315,620 5. 334,560 6. 354,630 7. 375,910 8. 398,460 9. 422,370 10. 447,710 11. 474,570 12. 503,050 13. 533,230 14. 565,230 15. 599,140 16. 635,090 17. 673,190 18. 713,580 19. 756,400 20. 801,780 21. 849,890 22. 900,880 23. 954,940 24. 1,012,230 25. 1,072,960 26. 1,137,340 27. 1,205,580 28. 1,277,920 29. 1,354,590 30. 1,435,870 31. 1,522,020 32. 1,613,340 33. 1,710,140 34. 1,812,750 35. 1,921,520 36. 2,036,810 37. 2,159,022 38. 2,288,560 39. 2,425,870 40. 2,571,430 41. 2,725,715 42. 2,889,258 43. 3,062,614 44. 3,246,370 45. 3,441,153 The Point of Choice TM

11 Simple vs. Compound Interest Simple Year 1 Compound 2 3 4 5 BalanceBalance InterestInterest $1,000$1,000 $1,100 $100 10% $100 $100 $100 $100 $100 $1,200 $1,300 $1,400 $1,100 $1,210 $110 $121 $133 $146 $1,331 $1,464 The Point of Choice TM

12 $5,400 $66,264 After 45 Years Simple vs. Compound Interest The Point of Choice TM

13 Compound Interest ALBERT EINSTEIN "There is no greater power known to man than compounding interest." "There is no greater power known to man than compounding interest." Compound interest is the greatest mathematical discovery of all time. Compound interest is the greatest mathematical discovery of all time. Compounding is the 8th Wonder of The World! Compounding is the 8th Wonder of The World! Compounding is mankinds greatest invention because it allows for the reliable, systematic accumulation of wealth. Compounding is mankinds greatest invention because it allows for the reliable, systematic accumulation of wealth. The Point of Choice TM

14 Option 1 – Home 1. Home AgeAmount20$3,500,000 30$2,000,000 40$1,500,000 50$600,000 60$350,000 Assumptions Beginning Home Value $250,000 Growth Assumption 6% Point of Choice © Point of Choice © The Point of Choice TM

15 $0 The Point of Choice TM

16 3.5 M 2 M600 K350 K1.1 M The Point of Choice TM

17 What is a 401K? 1. Home Point of Choice TM Set up by employer Investment contribution withheld from paycheck Contribution often matched by employer Several investment options No tax paid on contributions No tax paid annually on income Taxes paid on distributions Option 2 – 401(K) The Point of Choice TM

18 How does a 401K work? 1. Home Point of Choice TMEndingBalance YourContribution CompanyContribution 10% Income $2,000$2,000 Balance $4,000$400.. $4,400 2,100 2,100 8,600 8,600 860 860 9,460 9,460 Option 2 – 401(K) 2,205 2,205 13,8701,38715,257 2,315 2,315 19,8881,98821,876 2,431 2,431 26,7382,67429,412 2,553 2,553 34,517 3,452 37,968 2,680 2,680 43,329 4,333 47,662 2,814 2,814 53,291 5,329 58,620 2,955 2,955 2,955 64,530 6,453 70,983 3,1033,103 77,188 7,719 87,907 3,2583,258 91,422 9,142 100,564 3,4213,421 107,406 10,741 118,146 1 2 4 5 6 7 8 9 10 11 3 12 The Point of Choice TM

19 Option 2 – 401(K) Behavioral Intelligence 1. If you dont see it, you wont miss it 2. Substantial penalty for early withdrawal 3. Someone else does all the work. The largest liquid investment you will have in your retirement Nothing Else Will Even Come Close! 1. Home CONTRIBUTE 10% OF INCOME TO 401K OF INCOME TO 401K Point of Choice © Point of Choice © The Point of Choice TM

20 1. Home AgeAmount20$17,000,000 30$5,500,000 40$1,700,000 50$450,000 60$70,000 Assumptions Income Index 5% Beginning Income $50,000 Percent Contribution 10% Employer Match 4% Investment Yield 11% 2. 401K Option 2 – 401(K) Point of Choice © Point of Choice © The Point of Choice TM

21 3.5 M 2 M600 K350 K1.1 M The Point of Choice TM

22 20 M7.5 M1 M420 K2.8 M The Point of Choice TM

23 2. 401K 1. Home American Debt Payments Average American Household - $2,300 per month 800% increase in per capita debt -- past 30 years % more than 30 days behind on any payment % more than 30 days behind on any payment 4.2 THE GOAL Change Who Gets The Payment TO YOURSELF! ? 96% Make Payments on Time! Point of Choice © Point of Choice © The Point of Choice TM

24 2. 401K 1. Home Accelerated Debt Reduction Investments Average American Out of debt Double the smallest payment Roll payment up Option #3 ADR Including Home Mortgage IN 6 TO 8 YEARS! Point of Choice © Point of Choice © The Point of Choice TM

25 2. 401K 1. Home Point of Choice TM Option #3 ADR The Point of Choice TM

26 2. 401K 1. Home Point of Choice TM Option #3 ADR The Point of Choice TM

27 Option #3 ADR 2. 401K 1. Home Point of Choice TM The Point of Choice TM

28 2. 401K 1. Home Point of Choice 3. ADR TM

29 2. 401K 1. Home www.powerpay.org Utah State University Free Prints out a debt reduction calendar Point of Choice © Point of Choice © Option #3 ADR The Point of Choice TM

30 Point of Choice © Point of Choice © 2. 401K 1. Home Option #3 ADR The Point of Choice TM

31 2. 401K 1. Home AgeAmount20$12,600,000 30$4,300,000 40$1,300,000 50$300,000 60$0 3. ADR Assumptions Monthly Payments $2,500 Years to Payoff 8 Investment Yield 11% Point of Choice © Point of Choice © Option #3 ADR The Point of Choice TM

32 20 M7.5 M1 M420 K2.8 M The Point of Choice TM

33 33 M12 M1.4 M420 K4.1 M $50,000 Income$7,300,000 Financial Assets $33,000,000 Financial Assets $226,000 Income The Point of Choice TM

34 POINT OF CHOICE GOAL TODAYS DOLLARS $ 50,000 POINT OF CHOICE DOLLARS $ 292,000 $ 226,000 $ 1,025,000 The Point of Choice TM

35 2. 401K 1. Home Pension Plans and Social Security 3. ADR Benefit $ 35,000 1 $ 35,875 2 $ 33,218 $ 35,000 $ 37,691 3 $ 29,920 $ 38,633 4 $ 28,937 $ 39,599 5 $ 26,951 $ 40,589 6 $ 25,578 $ 41,604 7 $ 24,276 $ 42,644 8 $ 23,039 $ 43,710 9 $ 21,866 $ 44,803 10 $ 20,752 $ 45,923 11 $ 19,695 $ 47,071 12 $ 18,693 $ 48,248 13 $ 17,741 $ 49,454 14 $ 16,837 $ 50,690 15 $ 15,980 $ 51,958 16 $ 15,166 $ 53,257 17 $ 14,394 $ 54,588 18 $ 13,661 $ 55,953 19 $ 12,965 $ 57,352 20 $ 12,305 $ 58,785 21 $ 11,678 $ 60,255 22 $ 11,083 $ 61,761 23 $ 10,519 $ 63,305 24 $ 9,983 $ 64,888 25 $ 9,475 $ 66,510 26 $ 8,992 $ 68,173 27 $ 8,534 $ 69,877 28 $ 8,100 $ 71,624 29 $ 7,687 $ 73,415 30 $ 7,296 $ 75,450 31 $ 6,924 $ 77,131 32 $ 6,572 $ 79,060 33 $ 6,237 $ 81,036 34 $ 5,919 $ 83,062 35 $ 5,618 $ 85,138 36 $ 5,332 $ 87,267 37 $ 5,060 $ 89,449 38 $ 4,803 $ 91,685 39 $ 4,558 $ 93,977 40 $ 4,326 $ 96,327 41 $ 4,106 $ 98,735 42 $ 3,896 $ 101,203 43 $ 3,698 $ 103,733 44 $ 3,510 $ 106,327 45 $ 3,331 $ 582,576 $ 582,576 COLA 2.5% Yield 8% Investment Investment Point of Choice © Point of Choice ©

36 2. 401K 1. Home Pension Plans and Social Security 3. ADR Age Amount * 20$4,000,000 30$2,500,000 40$1,600,000 50$1,000,000 60$650,000 * Assumes full benefit + one half Point of Choice © Point of Choice © The Point of Choice TM

37 33 M12 M1.4 M420 K4.1 M The Point of Choice TM

38 37 M14.5 M2.4 M1.1 M5.7 M The Point of Choice TM

39 2. 401K 1. Home Point of Choice 3. ADR TM Option #4 Million Dollar Choices Option #4 Million Dollar Choices What if you made a choice that would save you $100 a month what would that mean to you? The Point of Choice TM

40 2. 401K 1. Home Point of Choice 3. ADR TM R = Recurring E = Expenses R = Right S = Save V = Vehicle I = Invest we and in the Life R.E.S.I.R.V. Option #4 Million Dollar Choices Option #4 Million Dollar Choices The Point of Choice TM

41 2. 401K 1. Home Point of Choice AgeAmount20$5,600,000 30$1,900,000 40$600,000 50$170,000 60$30,000 3. ADR 4. Million Dollar Choices 4. Million Dollar Choices TM Assumptions Income Index 5% Annual Contributions $1,200 Total Tax Rate 22% Employer Match 4% Investment Yield 11% Option #4 Million Dollar Choices Option #4 Million Dollar Choices The Point of Choice TM

42 37 M14.5 M2.4 M1.1 M5.7 M The Point of Choice TM

43 43.6 M16.4 M2.6 M1.2 M6.3 M $ 50,000 Income$ 7,300,000 Financial Assets $ 43,600,000 Financial Assets$ 300,000 Income The Point of Choice TM

44 2. 401K 1. Home 3. ADR 4. Million Dollar Choices 4. Million Dollar Choices Point of Choice 2 Choices That Are Not For Everyone! TM The Point of Choice TM

45 2. 401K 1. Home 3. ADR 4. Million Dollar Choices 4. Million Dollar Choices Point of Choice Option #5 Income Producing Real Estate 5. Income Real EstateTM The Point of Choice TM

46 2. 401K 1. Home Option #6 Own Your Own Business 3. ADR 4. Million Dollar Choices 4. Million Dollar Choices 5. Income Real Estate Point of Choice 6. Business Ownership TM The Point of Choice TM


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