1 Tools and Strategies for Life’s Financial Decisions Presented By: Brian H. Grant, CLU, ChFC, MSFS Certified Financial Planner™ President

2 Hypothetical Case Study Maxine T., MD 26 years old Single, female Second-year, Rheumatology Resident Annual income $38,000

3 Wealth Creation Foundation Stones Develop a budget – control spending Have an emergency fund Investing vs paying off loans

4 Managing Debt How much debt is too much? Debt to income ratio worksheet Scoring If your debt to income ratio is: Less than 30%: Excellent 30% to 36%: Good but work to get it below 30% 36% to 40%: Borderline. Will struggle to pay 40% or higher: Red Flag. Problems ahead. Do worksheet case

5 Monthly Debt Payments Monthly Mortgage Payment or Rent (Insurance and Taxes Included) $ Monthly Home Equity Line of Credit or Loan Payment $ Monthly Car Payment $ Monthly Revolving Credit Payments (Furniture, Appliance Loans, ect.) $ Monthly Student Loan Payments $ Monthly Minimum Credit Card Payment X2 $ Other Monthly Loan Amounts $ Monthly Child Support Payments $ Monthly Total Debt Payments $ Monthly Income Monthly Net (Take Home) Pay. Add back retirement contributions $ Annual Bonuses and Overtime ÷ 12 $ Other Annual Income ÷ 12 $ Total Monthly Income $

6 Wealth Creation The Power of Time CINDYTOMMY Age started2227 Age ended2765 Rate of return * 12% Contributions5 x $2,00039 x $2,000 Total Contributed$10,000$78,000 At age 65$1,311,900$1,219,661 Start Saving for Retirement TODAY! * These are hypothetical examples and are not intended to portray the results of any particular investment.

7 Wealth Creation Impact of taxes Increasing value of a penny Qualified retirement plans The Roth IRA opportunity Tax deferred strategies - annuities & mutual funds * Early withdrawals may be subject to a surrender charge. In addition, distributions prior to age 59 ½ may be subject to a 10% tax penalty. ** Tax free income is achieved by withdrawing from the policy cash value an amount equal to the total premiums paid (cost basis), then using policy loans for the balance. Outstanding policy loans at death, and withdrawals, will reduce the policy death benefit and cash values. If the policy is allowed to lapse with a loan outstanding, the amount of the loan in excess of your cost basis will be taxable as ordinary income to the extent of the gain in the policy and may be subject to a 10% income tax penalty prior to age 59 ½.

8 The Power of Tax Deferral Tax deferral means you don’t reduce your investment by income taxes during accumulation.

9 What is a Mutual Fund? FUND Invest $$$$ $$$$ Buy Shares Earnings PotentialProfits

10 Variety of Mutual Funds Money Market Fixed Income Balance Growth & Income International AggressiveGrowth Higher Risk Lower Risk HigherPotentialReturn LowerPotentialReturn

11 Why Invest in a Mutual Fund? Diversification and stability Collective buying power Professional management Convenience

12 Investment Strategies Maintain long holding periods Diversify –Asset allocation Dollar cost averaging –Purchase more in down markets; less in higher markets

13 Wealth Creation The Importance of Risk Management

14 Disability Insurance Insure the goose or the eggs? Ensure your future insurability “Own Occupation” definition Cost of living rider Residual Benefit Rider Non-cancelable policy

15 Power of Life Insurance Tax deferred growth Tax free retirement income Income tax free death benefit * Tax free retirement income is provided by first withdrawing premiums you have paid then taking any additional funds by using policy loans. Under current law, policy loans are income tax free provided this policy remains in force and is not a modified endorsement contract as defined by IRC7702A. If the policy is allowed to lapse with a loan outstanding the amount in excess of your cost basis will be taxable. Policy withdrawals or outstanding loans will reduce the cash value and death benefit to your beneficiaries.

16 Life Insurance Five primary reasons Income replacement Final expenses Covering debt New asset class Giving to charity The need and why…

17 Life Insurance Four Types –Whole life –Term –Universal life –Variable universal life

18 Life Insurance How much? What is the best type?

19 Education Planning Coverdell Education Savings accounts Comparing Plans 529 Plans

20 Financial Calculators Available on our website: Premierfinancialgroup.com Savings Taxes Loans and mortgages Business Auto Insurance

21 Premier Financial Group, Inc. 119 S. Easton Road P. O. Box 489 Glenside, PA (215) Member National Financial Partners Visit our websites: Premierfinancialgroup.com