THE THREE PHASES OF YOUR FINANCIAL LIFE

THINGS ABOUT MONEY YOU MUST KNOW TO AVOID FAILURE PART 1 ACCUMULATION
Pedro M. Adao, Financial Counselor

PHASE 1 - ACCUMULATION

WHY Avoid Failure

What are we talking about this morning: we are talking about you., your Life today, tomorrow, and the legacy you will leave forever. Over the next 4 days you are going to hear the truth about how money works, and get practical guidance on what you need to do to life a great life. WHY should you care about any of this? In a 2009 poll 61 percent of Americans admitted to living paycheck to paycheck 2010 the Social Security system will pay out more in benefits than it receives in payroll taxes. This was not supposed to happen until at least 2016 How long can this last? 35% of Americans over the age of 65 rely almost totally on Social Security alone. A record 33% of Americans now plan on working past the age of 70. What if there not wanted??? In 2007 prior to crash median balance in accounts of people age 54-66 was at just $60,740. Its probably less then half now as most probably got out of the market. The average savings of a 50 year old in the U.S. is $2500. Out of 100 people who start working at the age of 25, by the age 65: * 1% are wealthy * 4% have adequate capital stowed away for retirement * 3% are still working * 63% are dependent on Social Security, friends, relatives or charity. * 29% are deceased.
None of us want to become a statistic

PHASE 1 - ACCUMULATION

The Three Phases of Life 1. Accumulation 2. Distribution 3. Legacy If you have the fortune of living a long life then you will pass through all three phases. Phase 1 Accumulation is defined as the period of time where you are actively working, and using your body at work to create income. Income that is not required for current needs and or expenses is saved and invested to be accumulated to be utilized to provide for you when you can no longer work or choose not to work. Phase 2 Distribution: This is the phase at which you begin to make withdrawals from your accumulated wealth to provide for all of a portion of required income as you are working less or no longer working. Phase 3 Legacy: This is the phase where you transfer whatever has been left over at the end of your life to the next generation.

PHASE 1 - ACCUMULATION

Accumulation What are the biggest problems and or challenges to accumulating wealth? I in the previous study we learned that out of 100 people who started working at age 25 by 65 95% of them were either dead, still working, or financial dependent on the government or family. To me that is a 95% failure rate. If 95% of people are failing at anything then that must be there must be some very clear reasons for why this is. 95% of people dont fail on accident. Lack of honest advice from he financial industry Wall st runs this country Lack of discipline: Most families do not have a budget they are committed to sticking to Materialism and Consumerism: We want everything and we want it now we are the most marketed to generation in the history of the world Out of control Debt sucking income away from them Income: Most people flat out do not make enough money. This is especially a problem now Inflation and obsolescence things break down and need to be replaced Life Events: job loss, medical challenge, wedding, college, divorce Do Not Get Divorced: Counseling is much cheaper then divorce. If you are divorced and neither you and your spouse have remarried. Get to work on getting back together. What do I need to do Pedro to avoid failure? How much is enough? This is used to set he floor not the ceiling. Stewardship requires that we be faithful with whatever is in your hands.

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How Much Do I need Saved During Accumulation

4% is the amount that can be safely withdrawn from a portfolio to avoid account going to Zero during lifetime. This is every retired persons biggest fear. Running out of money before they die.

PHASE 1 - ACCUMULATION

Phase 1 - Accumulation
Traditional distribution planning states that 4% is the amount that can be safely removed from a diversified portfolio how much needs to be saved to have $50,000 of income spending power today 20 years from now. Assuming Inflation rate of 4%. It will require 110,000 to buy the same goods 20 years from now as 50,000 does today $110,289 / 4% = approximately 2.8M $3,600 a month saved for 20 years is required to create $2.8M in a portfolio. Assuming 10% growth Assuming always put in an never stop or withdraw during 20 years Assuming never get out of the market during market crashes People tend to do the wrong things stop putting money in during down markets and get out of stocks at the bottom 401(K) doesnt even allow this much to be contributed failure is guaranteed Why Compounding Money Doesnt Work Time takes too long Taxes pulling money out of the account each year Return assumptions we have no idea what the market is going to return Limited to no leverage its all your own money no one is helping you

PHASE 1 - ACCUMULATION

Phase 1 - Accumulation

What Should You Do? Focus on continuing to build your income Your income is your wealth engine Get on a budget where you can live on less than you make Save the difference so you can invest Invest in leveraged investments - positive cash flowing real estate Safest way to get positive leverage: Borrow bank money interests rates at all time lows, Favorable tax treatment depreciation / tax deferred growth, Tenants!!!! They buy the house for you, Puts inflation to your advantage: rents and values go up over time, Real estate in America especially has never been this cheap Get to Work and Build Your ACN Business How many years will it take you to build a 50K residual in ACN? Protect yourself from risks that can be completely devastating to you on your path to wealth Biggest risks: Divorce, confiscation of wealth through excess taxes and fees, lawsuit, car accident or homeowners claim, disability, premature death. Transfer these risks to insurance companies for pennies on the dollar and have peace of mind knowing that if God forbid something really bad happen your goals and dreams for your family still come true. A self completing plan. Text me now to make sure you get one of the 25 complimentary planning appointments to have a detailed review of your individual situation 925-584-1312 Big WHY: Becoming financially free and fully funding your retirement should be a huge part of your WHY for acquiring customers, I have been working with Ralph R. he is getting customers by sharing his why with them. Sharing this financial information and knowledge with others will become the WHY for them as to why they should become your business partners. Asking thought provoking questions? Every person you bring and support in this business you are saving from a 95% failure rate. If that doesnt motivate you to get busy finding partners then nothing well. Focus on the value to them not just the value to you. What do you sell? What if the next partner you bring in gets on fire for this business and has so much success they end up contributing 1000 a month to rescuing one child out of sex slavery each month. You will do more for others then you will do for yourselves parents are great examples.

THIS CONCLUDES THE NOTES FOR PART 1 - ACCUMULATION

THE THREE PHASES OF YOUR FINANCIAL LIFE

THINGS ABOUT MONEY YOU MUST KNOW TO AVOID FAILURE PART 1 ACCUMULATION

Pedro M. Adao, Financial Counselor 925-778-5626 Office Pma.adao@gmail.com