1. 1. Balance the budget 2. Establish short-term emergency fund 3. Pay off consumer debt 4. Establish long-term emergency fund 5. Develop “large purchase” savings plan 6. Pay off mortgage 7. Save for retirement 8. Save for college 9. Invest the surplus 10. Share the surplus 1 © 2012 Matthew S. Whiting Wk 6

2. Motivation - Surplus is the operative word Investments we covered in weeks 1 thru 5 Risk tolerance Basic principles Investments beginners should avoid Investments beginners should consider Successful investing is hard work! 2 © 2012 Matthew S. Whiting Wk 6 Larry Burkett, Randy Southern, “The World’s Easiest Guide“ to Finances, (Chicago: Moody Press, 2001)

3. Greed – Never have enough Laziness – Get rich quick Ego, Jealousy Competition, game Provision for the future Self Family Church Other (colleges, schools, charities, etc.) 3 © 2012 Matthew S. Whiting Wk 6

4. Week 2 Investing in God’s work by including your tithe first in your budget Investing in your peace of mind by having an emergency fund Investing in your marriage by removing, or at least reducing, the #1 cause of marriage strife – money problems Week 4 Investing in your home Week 5 Investing for your retirement Investing for education 4 © 2012 Matthew S. Whiting Wk 6

5. All investments have risk Return is often proportional to risk Savings accounts have inflation risk Stocks and bonds have risk of loss of capital Government investments have risk of default Not investing has risk also! You have to determine your risk tolerance http://isi-su.com/new/risktol2.htm http://www.kiplinger.com/tools/riskfind.html Risk management Only invest money you don’t “need” Only invest in things you understand Don’t make quick decisions – pray, get counsel 5 © 2012 Matthew S. Whiting Wk 6

6. Research before you invest Understand what you are getting into Consider the advice of those more experienced “Without counsel purposes are disappointed: but in the multitude of counselors they are established.” Proverbs 15:22 Diversify Investment types (stocks, bonds, fixed income, etc.) Within type (different industries, companies, etc.) Geographically (domestic and international) Who was the first diversification advocate in the Bible? “Give a portion to seven, and also to eight; for thou knowest not what evil shall be upon the earth.” Ecclesiates 11:2 6 © 2012 Matthew S. Whiting Wk 6

7. Commodities - volatile, hard to understand Limited Partnerships - tax complications Tax Shelters - risky, may be deemed illegal Precious metals, gemstones - volatile Collectibles - buy at retail, sell at wholesale Individual stocks - volatile 7 © 2012 Matthew S. Whiting Wk 6

8. A home Rental properties Mutual funds Company retirement plans (401k, etc.) Government backed securities (t-bills, etc.) Insurance products (annuities, etc.) 8 © 2012 Matthew S. Whiting Wk 6

9. 9 © 2012 Matthew S. Whiting Wk 6 Need to monitor investments often Need to learn how to read financial statements Need to know when to buy Need to know when to sell If you really want to be an investor, read… Benjamin Graham, Jason Zweig, The Intelligent Investor, (New York: Harper Collins, 2003)

10. 1. Balance the budget 2. Establish short-term emergency fund 3. Pay off consumer debt 4. Establish long-term emergency fund 5. Develop “large purchase” savings plan 6. Pay off mortgage 7. Save for retirement 8. Save for college 9. Invest the surplus 10. Share the surplus 10 © 2012 Matthew S. Whiting Wk 6

11. Once you have taken care of your own needs and those of your family, both now and through retirement, you have 3 basic choices: Spend the surplus less than wisely Give to others while you are alive Give posthumously According to your wishes Let the government have control 11 © 2012 Matthew S. Whiting Wk 6

12. Spending money on things you don’t really need. Making risky investments (speculation) Giving to charities that don’t use money wisely 12 © 2012 Matthew S. Whiting Wk 6

13. “Giving while you are living, so you are knowing where it is going” Support church projects Support missionaries Support legitimate Christian organizations Schools Adoption agencies Benevolent organizations Many other sound choices http://www.charitynavigator.org/ 13 © 2012 Matthew S. Whiting Wk 6

14. Have a current will (no more than 5 years old) Without a will (intestate), the government takes control Trusts 14 © 2012 Matthew S. Whiting Wk 6

15. Your will includes: Designation of executor/administrator Designates guardians for your children Establishes trusts for children Distributes your assets as you intend If you die intestate, Pennsylvania will: Appoint an administrator Control asset distribution according to state law. A good summary is shown here:  http://www.wolfbaldwin.com/attorneys_lawyers/articles. asp?ArticleID=34&Page=pa_intestate_no_will_intestacy_e state_Pennsylvania.asp http://www.wolfbaldwin.com/attorneys_lawyers/articles. asp?ArticleID=34&Page=pa_intestate_no_will_intestacy_e state_Pennsylvania.asp 15 © 2012 Matthew S. Whiting Wk 6

16. A Trust is a legal arrangement where assets are held by one party for the benefit of another party. Some trust basics are covered at these sites: http://en.wikipedia.org/wiki/Trust_law http://www.paestateplanners.com/faq.cfm Trusts serve many purposes: Maintain privacy Avoid taxes Control asset distribution over long time frames Trusts do have downsides: Can be expensive to establish and maintain May permanently lose control of the assets Can be complicated 16 © 2012 Matthew S. Whiting Wk 6

17. 17 Wk 6 © 2012 Matthew S. Whiting Balancing the budget Establishing a short-term emergency fund Paying off consumer debt Establishing long-term emergency fund Creating large purchase savings plan Paying off mortgage Saving for retirement Saving for college Investing the surplus Sharing the surplus

18. Questions? © 2012 Matthew S. Whiting 18 Wk 6

19. Budget development workshop Investments Insurance Retirement planning College funding Reverse mortgages Others??? 19 © 2012 Matthew S. Whiting