Joey’s

Financial
Plan
Emily Jang, Kelly Nguyen, Seth Sofia, Victoria Wolcott
The strategic approach
Mission Statement:

Joey will become more financially literate. He will be capable of managing his money well in
order to be financially comfortable throughout his life.

Goals:

● Continue supporting parents

● Go to grad school
● Begin making a plan for retirement
Strategic approach
Objectives:
● Start an emergency fund
● Begin investing
● Pay off car and credit card debts
● Pay off student loans
● Save for grad school tuition
Pie chart approach
Pie chart approach
 Choose the Annuity
NPV
INFLATION
ADJUSTED
Net Income OVER 5
PMT Taxes Paid Net Income Over 5yr Choose? YEARS

Lump Sum PV $910,000 $536,250 $438,750 $633,750 No $606,971.94

Salary $65,000 $16,250 $48,750

5 yr PMT $200,000 $92,750 $172,250 $861,250 Yes $800,243.96

DIFFERENCE IN NET
INCOME FOR
Tax rate on Lump Sum 55% ANNUITY $227,500 $193,272.01

Tax rate on Annuity 35%

● Tax rate will be lower
Normal tax rate 25%
● Receive more of winnings
Rate of Inflation 2.50%
RETIREMENT
● Joe needs to start saving ASAP for retirement. The sooner he starts saving money, the more
money he will have when he retires
● Joe does not want to struggle like how his parents are right now
● Joe is capable of taking on riskier investments while he is young
● If people start saving from age 25-35, they will only need to put away 10-13% of their gross
annual income in broad growth portfolios to meet retirement goals

O S A VE
T
PLAN From age 24-29, Joe should save 10% of his income for retirement. Once he
has graduated and has a full time paying job, with a higher salary, he can
start saving 13% of his income.
EDUCATION FUNDING
● Joe wants to go to grad school in 3 years and believes it will take 2 years
to complete
● He has 3 years to save enough money to be able to fund his education and
pay his bills without having to go to work

S AV E
L AN TO
P
•529 Savings Plan - Tax deferred funds to purchase college credits at price TODAY that can be used LATER
• Joe needs to purchase all the credits he will need to complete grad school TODAY, ASAP, NOW!
•The sooner he purchases them, the more he is saving in the long run
MONEY TO PARENTS
● Joe's parents are expected to live 15-20 more years and it is very important to him to keep giving
money to his parents to help them
● annuity to the parents

S AV E
AN T O
PL
•Invest in a bond that will pay annuities that equal to the $5,000 per year. Once the bond matures, Joe
can collect the principle amount for himself
•Although he will have to fork over a large amount of cash upfront, he will not have to give his
parents cash from his own pocket. They can get the money from the annuities/interest from the bond.
Also, Joe will end up getting that large amount he paid upfront back in 20 years when his parents have
died
BUYING A HOUSE
● Joe wants to have a family sometime after finishing graduate school
● In order to live comfortably, he will need to have a house for his family. Potentially, his parents
could come live with him and he wouldn't have to pay for a retirement home

PLAN TO SAVE
•Joe needs to put money into his IRA starting now and leading up until
he has $10,000 to take out of the account and about $500 cash on hand to
put towards the down payment
•Joe can take out $10,000 from his IRA to help put a down payment on his
house. $10,000 without penalty
EMERGENCY FUND
● Just in case of unpredictable events like…
○ Car problems
○ Medical emergency
○ Job loss

S AV E
AN T O
PL
3 Months of Joe's Salary

Salary: $65,000/ Months: 12= Monthly Salary:$5,416.67

$5,416.67*3= $16,250
 Investing in His Future

Joe invest ⅓ of lottery winnings at age 26

Expected Return Investment Interest Received FV @ AGE 64

Balanced Mutual Funds 7.00% $166,666.00 $11,666.62 $2,179,869.85

Corporate Bonds 5.50% $166,667.00 $9,166.69 $1,274,803.02

TOTAL $333,333.00 $3,454,672.87

➢ 38 years for investment to grow

 401K PLAN

Annual contribution until

Initial Contribution Employer Match Gain retirement

$40,000.00 5% $2,000.00 $2,000.00

Invest -$40,000.00
❖ Begin contributing to
plan at age 29 Emp match 5%

Emp match in $ -$2,000.00

❖ 36 years until
retirement
Years until retirement 36

PMT -$2,000.00 Risk Level

Balanced mutual 7% 20% High

Corporate Bonds 5.50% 15% Moderate

Avg E(r) 6.25%

FV $639,993.00
 Conservation Phase
Continue saving for kids to go
to college, increase insurance
Asset Accumulation Distribution Phase
Conservation Phase
Purchase car for kids and buy
Paying off outstanding debts Have grandkids,
insurance
increase health
Asset Accumulation Phase Distribution Phase
Finish grad school
insurance, give to
Go on more vacations!
charity more

20’s 30’s 40’s 50’s 60’s 70’s

Asset Accumulation Phase Distribution Phase Distribution Phase

Get married, make her sign a
prenuptial agreement, buy a Paying for kids to go Leave Legacy fund for
house, get homeowner’s to school kids and grandkids
insurance, start investing and
saving for retirement. Move
parents in home and hire in home
caretaker.
Conservation Phase
Save money for kids’ college tuition,
pay off outstanding debts
 The BIG Picture
Finish Grad School Start a Family Lowers Debt Mid life crisis Retirement

-Purchase prepaid -Take out $10,000 from -Pays off mortgage -Marriage counseling -Save 10% of income
tuition credits IRA to put towards from lottery winnings using money from the from age 24-29
-Purchase bond and down payment for emergency fund -Save 13% of income
give the interest house -Buy the newest Tesla after getting a higher
payments to parents -Draw up a prenuptial with principal amount salary post grad school
-Live off of lottery agreement to secure from the bond -Estate Planning: leave
winnings while in assets before marriage -Have a boat party in kids with all the money
school -Have a wedding using Miami using the money and assets.
a portion of the lottery from the bond
annuity. -Divorce Karen-she
-Save money for kids gets nothing
college
Thank
you!