BUS6600 - Bonus Managing Personal Finances

SIX STEPS TO CONTROLLING YOUR ASSETS

1. Take an inventory of your financial assets.

2. Keep track of all your expenses.

3. Prepare a budget.

4. Pay off your debts

5. Start a SAVINGS PLAN.

6. Borrow money only to buy assets that have the potential to increase in value.

CONTRARIAN approach

is buying stock when everyone else is selling or vice versa.

TERM INSURANCE

is pure insurance protection for a given number of years.

WHOLE LIFE INSURANCE

combines pure insurance and savings.

universal life policy

lets you choose how to divide the premium between insurance and investment.

VARIABLE LIFE INSURANCE

whole life insurance that invests the cash value of the policy in stocks or higher-yielding securities; it is vulnerable to stock market dips.

ANNUITY

a contract to make regular payments to a person for life or for a fixed period.

FIXED ANNUITIES

investments that pay the policyholder a specified interest rate.

Disability insurance

is insurance that pays part of the cost of a long-term sickness or an accident.

UMBRELLA POLICY

a broadly based insurance policy that saves you money because you buy all your insurance from one company.

SOCIAL SECURITY

the term used to describe the Old-Age, Survivors, and Disability Insurance program established by the Social Security Act of 1935.

INDIVIDUAL RETIREMENT ACCOUNT (IRA)

An _______ is a tax-deferred investment plan that enables you (and your spouse, if you are married) to save part of your income for retirement.

Tax-deferred contributions

_______ are retirement account deposits for which you pay no current taxes, but the earnings gained are taxed as regular income when they are withdrawn at retirement.

ROTH IRA

A _________ is an IRA where you don’t get up-front deductions on your taxes as you would with a traditional IRA, but the earnings grow tax-free and are also tax-free when they are withdrawn.

59½ years old

You cannot take the money out of an IRA until you are _______ without paying a 10% penalty and paying taxes on the income.

401(k) plan

A ________is a saving plan that allows you to deposit pretax dollars and whose earnings compound tax free until withdrawal, when the money is taxed at ordinary income tax rates.

FINANCIAL PLANNERS

_________are people who assist in developing a comprehensive program that covers investments, taxes, insurance, and other financial matters.

select a guardian

The first step is to _________ for your minor children, someone with a genuine concern for your children.

WILL

A _________ is a document that names the guardian for your children, states how you want your assets distributed, and names the executor for your estate.

executor

The _______ is a person who assembles and values your estate, files income and other taxes, and distributes assets.