Welcome to PNC’s
Saving
g and Investing
g
1
Agenda
•
•
•
•
Understanding Saving & Investing
Saving and Investment Options
Getting Started
Partnering with PNC
2
Let’s look at four typical families:
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Objectives
The purpose of this workshop is to help you:
• Understand how savings accounts and other
types of investments work
• Identify your savings and investing goals
• Determine action steps you can take to start
meeting
i your goals
l
4
What are Savings and Investments?
• Savings
– Short term needs
– Easily accessed
– Lower return and lower risk
• Investments
– Medium
M di
or longer
l
term
t
needs
d
– Higher return and higher risk
5
Short Term Needs
• Unexpected
p
home or car repairs
p
• Illness in family
• Loss of Job
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Medium Term Needs
•
•
•
•
Buy a car
Pay for a wedding
Down payment for house
Vacation
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Long Term Needs
• College
g
• Retirement
8
What are your short term
and long term goals?
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Making Your Money Grow
• Key terms to know:
– Principal
– Interest
– Compounding
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Principal and Interest
• Principal is the money you deposit into a
b k or use to purchase
bank
h
iinvestments
• Interest is money you earn when you keep a
balance in a bank savings
g account or other
investment
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Compounding
• Earning
g interest on interest alreadyy ppaid to
you
• Can be compounded annually, monthly or
daily
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Impact of Compounding
Value of $1,000
invested:
At 4%
At 6%
At 8%
At 10%
At 12%
1 year 2 years 5 years 10 years20 years
$1,041
$1,062
$1 083
$1,083
$1,105
$1,127
$1,083
$1,127
$1 173
$1,173
$1,221
$1,271
$1,221
$1,350
$1 492
$1,492
$1,649
$1,822
$1,492 $2,225
$1,822 $3,319
$2 225 $4,952
$2,225
$4 952
$2,718 $7,387
$3,319 $11,019
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What are the Benefits of Starting Early?
• Lump sum deposit
• Small continuous deposits
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Savings and Investment Options
•
•
•
•
•
•
•
Savings
S
i
accounts
t
Certificates of Deposit
US S
U.S.
Savings
i
B
Bonds
d
Stocks and bonds*
Mutual funds*
Investment clubs*
Individual Retirement
Accounts*
• Annuities*
*
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Savings Accounts
• Opened by visiting
a bank
• FDIC insured
• Lower returns
• Lower risk
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Certificates of Deposit
•
•
•
•
•
Offered by banks
FDIC Insured
Fixed Interest Rate
Fi d M
Fixed
Maturity
i
Penalty for early withdrawal
$
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U.S. Savings Bonds
• Obligation of U.S. government
g
• Purchased at banks or through
some employers
• Purchased at 1/2 “face value”
• Earn interest until cashed in
• Guaranteed to reach face value in
17 years
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Stocks
• Represent partial ownership of a
business
• Stock purchased through broker
• Company may pay dividends
• Value of stock can go up or down
g
risk
• Higher
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Corporate Bonds
•
•
•
•
IIssued
d bby a company
Fixed interest rate
Fixed maturity date
Can sell bond to another investor before it
matures
• Price of bond can go up or down
• Higher risk
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M t al Funds
Mutual
F nds
• P
Pools
l money ffrom a llarge number
b off investors
i
t who
h
each own shares in the fund
• Funds invested by Fund Manager
• Can invest in stocks and bonds
• Funds
F d hhave llarge number
b off investments
i
t
t which
hi h helps
h l
to diversify your risk
• Higher risk
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Understand Your Investments
• If you decide to invest in individual
companies or mutual funds you can
learn more about investing by:
– Reading the financial section of
newspapers
– Watching financial news programs
– Reading books and magazines on
investing
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I
Investment
t
t Clubs
Cl b
• S
Small
ll group off people
l pooll their
th i
money to invest in stock market
• Club decides what to invest in
and how profits will be
distributed
• Can open a brokerage account in
club’s name
• Higher risk
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Individual Retirement Accounts
(IRA )
(IRAs)
• Specialized accounts for long
long-term
term saving
• Money in an IRA can be invested in mutual
funds stocks
funds,
stocks, bonds,
bonds CDs
CDs, etc
etc.
• Can offer certain tax advantages
• May have penalties for early withdrawals
• Types of IRAs include traditional taxdeductible IRAs for retirement, the Roth
IRA and Coverdell Education Savings
Account.
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Annuities
• Sold by insurance companies
• Can invest a lump sum or make monthly payments
• Payments to you can begin immediately or be
deferred until a future date such as retirement
• Fixed
Fi d annuities
i i have
h
a fixed
fi d rate
• Variable annuities offer flexible investment options
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Savings and Investment Strategy
• Determine your goals - short & long term
• How
H are you ddoing
i in
i meeting
ti your goals?
l?
• Make a commitment to save a set amount
each week or month
• E
Establish
t bli h emergency savings
i
if you haven’t
h
’t
already done so with a bank savings account
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Savings and Investing Strategy
(continued)
• Look at your longer term goals:
– If you have children, plan for their education
– Begin planning for your retirement no matter
what y
your age
g
• Ask questions. PNC Investments
representatives are available to help you.
you
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Let’s revisit our typical families:
What advice would you give to Rita?
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What recommendations would you make
to Molly
M ll andd Jon?
J ?
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What advice would you give to Susan
and Ben?
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What would you suggest that Virginia
and Harry do?
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What can you begin to do to meet
your financial
fi
i l goals?
l?
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Whatever you situation, remember
that PNC representati
representatives
es are ready
read to
help you!
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Questions and Answers?
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