RICH IS A STATE OF MIND

Building wealth and happiness

Slide show by Margaret Marry

http://www.richisastateofmind.com/

What is Rich?

Some say Rich has to do with the amount of money you have, But that’s not always the case. Rich doesn’t always have to be about the money you make or already have. You can be rich in many other ways such as: love, friendships and health. It’s all about the Amount of something you give and receive on a day to day basis. Once you realize Money isn’t everything and stop to look around at what you do have, you will then know that you have been rich the whole time.

A few questions to ask yourself

How do you feel about Money? What does it mean to you? What do you know about it? Why would people be afraid of money? Why does money cause anxiety for some people? Why do we shut down when we know we are

having money issues? How do I save money? How much do I save? What does risk and reward mean to you? When do I start? Start early: Time is your friend.

Goal Settingwhat is the goal?

What types of goals do you have? List 5 (doesn’t have to be financial goals). It’s

better tostart with simple, easy goals and go from there. Forexample (these arenot in order) :

1) Going to the Gym at least twice a week 2) Calling your parents at least once a month 3) Put away half my pay in my RRSP 4) Go on vacation somewhere warm 5) Save for wedding

Goal Settingwhat is the goal? pt 2

With these goals, Prioritize them in order from most important to least. Ask yourself: why are they in this order? Why are they important to you?. Once you have accomplished this, Price each one (rough estimates will do) and factor that against how much you will save on each one. Its hard to make choices, especially with our money. We constantly ask ourselves: Why are we forced to make choices?. Ask yourself this and see why you think choices have to be made.

Different typesof Goals

We all have goals in life, But have you thought about “SMART” goals?

S- Specific M-Measurable A- Achievable R- Realistic T- Time Based

Take some time later to think about “Smart” goals you have and write them down.

What would you pick?

If you could pick between have $ 1Million Dollars right now or 1¢ doubled for 30 days, what would you pick and why?

One cent doubled for 30 Days

If you chose to take one cent and double it for 30 days, this is what youWould get. This is called, Interest.

What is Interest? Finance: A fee paid for the use of another party's money. To

the borrower it is the cost of renting money, to the lender the income from lending it.

Interest on all debt is normally deductible before taxes are assessed on a company's income. Corporate legislation requires disclosure of interest

payable on loans, and companies often show a single interest figure in the income statement while providing details in a note that may also include netting out of interest received or some other adjustments. In cost accounting, interest is normally excluded from cost computations on the grounds that (being a payment for capital) it is equivalent to dividend, and hence is a finance item and not a cost item. The rate of interest is usually expressed as an annual percentage of the principal, and is influenced by the money supply, fiscal

policy, amount being borrowed, creditworthiness of the borrower, and rate of inflation. the two types of interest are simple interest and compound interest.

Simple and CompoundInterest

Simple interest: Interest computed only on the principal and not on principal plus interest earned or incurred in the previous period(s). Simple interest is used commonly in variable rate consumer lending and in mortgage loans where a borrower pays interest only on funds used. Formula: Principal amount x Annual interest rate x Number of years.

Compound Interest: Interest computed on the principal amount to which interest earned to-date has been added. Where compound interest is applied, the investment grows exponentially and not linearly as in the case of simple interest. Formula: Principal x {(Annual interest rate ÷ 100) + 1}^number of years. For example, $1,000 at an annual compound interest rate of 10 percent will, in 5 years, be: 1000 x {(10 ÷ 100) + 1}^5 = $1,6105.51.

The good and the bad.Differences in debt

Not all Debt is bad. In fact there is good debt out there, you just need to know what the difference is between the two.

Good debt: Investments, Mortgage, Business loans, School loans

Bad debt: Credit cards, Car loans, Store credit.

Car Loanswhy they are bad

Car Loan: 25,000 4 years @ 9% - $ 622.28/month Total cost- $ 29,869.44 Car Value:

$12,000 5 years @ 9%- $519.09/month Total cost- $31,145.40 Car Value:

$10,000

What does this tell you? That you are actually paying more for your car then you thought you would be.

Leverage

the use of a small initial investment, credit, or 

borrowed funds to gain a very high return in relation to one's investment, to control a much 

larger investment, or to reduce one's own liability for any loss.

Myths of Leverage

1) You have to be rich already 2) Debt = Bad 3) Way to risky for me 4) Returns must exceed cost to make

money

Inflation

a persistent, substantial rise in the general level of prices related to an increase in the volume of money and resulting in the loss of the value of currency.

Inflation Example

Taxes

a sum of money demanded by a government for its support or for specific facilities or services, levied upon incomes, property, sales, etc.

Levied:an imposing or collecting, as of a tax, by authority or force.

Tax rate

Taxable Questions

1) How so I minimize tax for the longest period possible?

2) How do I maximize the value of my estate? 3) How do I maintain a steady income stream? How do I continue to grow my estate? How do I keep most controle? How do I reduce my taxes? 1) earn less money 2)use RRSPs to save tax 3)use borrowed money invest 4)review the type of investment income

Tax Returns:why do we need to

fill them out?

By filling out a tax return you are generating RRSP contribution room, the benefit that you don’t have use it immediately. You carry it forward until a point in the future when you do decide to make a contribution in order to help reduce the amount of taxes you will pay when your income is higher, but if you don’t file, you aren't building that room to be used later.

Retirement Savings Plan

A money making factory, allowing you to grow small amounts of money into larger amounts while sheltering it from taxation.

Delayed Gradification

The ability to not do something today or have something today, for the ability to be able to do it tomorrow and a whole bunch more because you were patient and committed enough to wait. Or

I want a comfortable financial future more then “Stuff” today.

A Registered Retirement Income Fund

is a tax-deferred retirement plan under Canadian tax law. Individuals use an RRIF to generate income from the savings accumulated under their Registered Retirement Savings Plan. As with an RRSP, an RRIF account is registered with the Canada Revenue Agency.

Minimum Annual Payment

The smallest amount of a credit card bill that a consumer can pay, to remain in good standing with the credit card company. Making the monthly minimum payment on time is the least a consumer needs to do, to avoid late fees and to have a good repayment history on his credit report. The amount of the minimum monthly payment is calculated as a small percentage of the consumer's total credit balance.

Example of how Minimum Annual Payment

WorksOld vs New

Advantages vs Disadvantages

Cash- Advantage: You get to use CashDisadvantage: Huge tax liability

RRIF-Advantage: Money grows sheltered for taxesDisadvantage: Have to take minimum amount out each year

Annuity-Advantage: Guaranteed annual/ monthly paymentDisadvantage: Lose ownership of assets

Investing $2000/yr for 10 years staring at 22 years of age

Investing $2000/ yr for 30 years starting at 32 years of age

Interest

Liquidity : How easy it is to get your money back out or from an investment. Cash is Liquid, Real estate is not

Safety: The amount of risk you are exposing yourself to