On Take It To The Bank,
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you'll find ways
to, get out of debt...
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solve your credit card problems,
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how to make and
stick with the budget,
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simple ways to save,
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buying or selling a home
and many more financial matters
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on Take It To The Bank.
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Hi, my name is Cordell Thomas
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and welcome to
Take It To The Bank.
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Today, we're talking about
something quite interesting.
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I think you'll find it
quite interesting as well;
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we're going to have
some other expert opinions
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in reference to investing
and these type of issues.
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Discussion about
long term investing,
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and why that's so important.
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You know, as we talk
about investing, I really like
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some of the things
that are out there,
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there are a lot of
products that we can talk about,
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product and the services
that give us the benefit
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of putting more
and more money aside.
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If you are able to
plan accordingly, long term,
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you can better your
long-term opportunities
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in reference to your retirement,
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in reference to emergency
savings type of things.
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Liquidity items
become a concern,
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meaning your
access to actual funds.
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And, what's interesting
as you take a look at
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different
successful individuals,
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and how they set
up their budgets,
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you can see that they do have
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a third of what
their net value, net--
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net worth in
reference to liquid assets,
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so things that they can get
access to relatively quickly
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whether or not it'll
be in the form of a CD.
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What's this CD is
actually a promise
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between you and the bank
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for them to give you an
increased interest rate,
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if they can have
your funds tied up
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for a certain amount of time,
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whether or not
it'd be in the form
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of individual retirement account
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which you have to hold on to
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and invest in for the
course of several years
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and you can't
touch those accounts
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because you will
be penalized for it.
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So, it's essential
that you understand,
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that there are
benefits to investing,
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there are benefits
to planning long term
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and if you are able
to take the first step
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and begin to assess
your current situation
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and understand that,
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okay, right now, I might
be spending what I'm making,
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if I make the right
changes, the right--
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right adjustments in my budget,
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I can have a better opportunity
to find additional funds,
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if I can substitute and
cut back in certain areas.
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Because, I
don't need a landline,
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a cell phone and a
technology voice over IP line.
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There are several
things that you can do,
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and just put
additional funds aside
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and give it back
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in reference to tithe
as well as on offerings
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as well as putting
money into emergency accounts
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and buying the assets
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that you would need
from a long-term perspective.
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There are a lots
of things you can do.
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And as we talk
about these things
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there may be terms that
you may have a concern with,
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we'll try to break them down,
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we'll try to make
them as simple for you
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to understand as possible,
but the main issue here
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is long-term versus short-term,
less accessibility to it,
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but benefits from the
long, long-term perspective
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and then of course we
can't get access to those funds
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and that's okay, because
they're building long term
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to give you some type of return
on that investment long-term.
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Some of the things
that are kind of interesting
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is when you talk to young people
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about these issues there,
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you get this, "MEGO", type
of thing, it's what is MEGO?
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MEGO's, My Eyes Glaze Over.
What does that actually mean?
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You know, I've heard
it, done that, you know,
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I'm not interested in
it because it's far beyond
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what I'm even going
to think of right now.
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We always think about the now.
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We're not
worried about next year,
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or 20 years from
now, much less retirement
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and as a 15 or
18 or 22 year old,
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you find those are
the major challenges.
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But, we're finding a
certain level of success
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as we develop
these conversations
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with these young people
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and when you are
able to challenge them.
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And of course the three elements
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to the success
of this program is,
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we get them to see,
we get them the visual,
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for the visual learners,
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we get them to hear for
those auditory learners.
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And we also mandate that
they engage in conversation.
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So some of the topics
we will share with them,
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they begin to discuss
and provide their insight.
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And, we try to make sure
there's no real wrong answers,
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we try to ensure
that we straighten out
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misconceptions
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and we find that,
based on that sharing,
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people retain information
long, a lot long after
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that most people will forget
in these type of conversations.
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We try to make
an exciting process,
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because they put
it into practice.
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And one of the
first things we do
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is go through
the budgeting cycle.
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So, when they
fill out a budget form,
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regardless of if we have income
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of 1,500 or
2,000 dollars a month,
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or upwards of
7,500 dollars a month,
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you get a perspective
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of what you have
coming in and going out.
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One of the big and most
important things is this,
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you cannot begin
planning long term
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if you haven't
planned for the now.
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If you don't
know where you're at,
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you'll have no clue
of where you're going.
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Many people who
start paying into insurance
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or investments
cannot do it long-term,
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because they don't have their
basic budget taken care of.
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And so when you don't
have that basic taken care of,
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you'll find that when
things have to go away,
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because you have to
take care of the basic,
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essential necessities of
life that the things that go
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are those that you
give up relatively easily
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like the insurance and
the long-term investments
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in the savings projects.
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So I would say,
let's think for now,
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by planning your budget,
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planning how you're
gonna make your expenses,
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planning how
you're going to do things.
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And when you have an idea
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of how much money
you can actually save
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by cutting back
in certain areas,
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then you have a
better opportunity
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to move forward with this thing
called long-term investing.
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Okay, so what are we
going to talk about first?
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There are many
type of free programs
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that are available to you.
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And we had an opportunity
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to speak to Mr. Joshua Hernandez
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about these type of elements
and I'd like to share with you,
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this specific conversation.
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When we go on
and do some of these
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critical think seminars
around the area that we do,
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specifically in
Southern California,
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one of the things
that interest people
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is a free money kind of a thing.
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They think there's
nothing free in life
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and which is true.
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There's a cost to everything.
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But when we look at how
you can make investments
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for your future, I
thought it would be appropriate
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to discuss that with someone
that knows about investments.
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Joshua has been
a resource for us,
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and I'm going to ask you
to start with some concepts
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that young people should--
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should understand, in
reference to how money works
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and how they can use that time
that they have to develop well.
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Absolutely, you know the--
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in terms of big
picture investing,
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you know, you could--
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you could make money,
you could lose some money
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just depending
on the stock market,
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but you can always
make some money back.
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What you can't make back in life
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is you can't
make back your time.
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That's one thing
that's very, very important.
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As a young
professional, as a young person,
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often we don't think about that.
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We believe that we have
plenty of years left to,
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to do what we
think we'd like to do.
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And next thing you know,
you start talking to people
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like your parents
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and they start
telling you, "You know what?
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We've got to hurry
up and do some stuff."
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And they end up
having to do extra
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to make up for
what they've lost.
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So starting young is
just a significant idea
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and one of the misconceptions
of investing money
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or saving the money, period,
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is that you need a
lot of money to save
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and you don't need a
lot of money to save.
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You can start saving
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with as much as
you're comfortable with.
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That could be $25 a month,
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that could be a $100
a month, $500 a month.
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It's just really
within your budget,
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that's the first idea, it's,
start with what you can save.
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So savings is a key issue,
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learning about
savings is a key issue.
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So as we talk about
these specific scenarios
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and we'll talk to the
parents and kids alike.
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Young people,
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you're probably going to
copy your parents' behavior.
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And one of the things I
will chat with you about is,
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if they spend or if
you spend what you make.
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Then you're probably
in a difficult situation,
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living paycheck to paycheck,
which is a very common thing
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when you're
looking at urban markets
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and that type of thing.
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So, I'd ask you to change that.
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We want to change our mindset
about how money actually works.
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And we're going
to talk about things
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like rule of 72, you
know, compound interest
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and how that value can be
of value to you long-term.
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Very interesting
conversations about funds
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and how money actually works,
and we get the perspective.
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The first thing I would do
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in response to the
conversation we just had
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is make this statement that,
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when you look for
expert information,
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don't go to
somebody that you know.
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For example, we've
always asked the question about,
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who you go for?
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Who do you go to
for financial advice?
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And many people will
say, "I go to my parents,"
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"I go to my mom,"
"I go to my friends."
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I would tend to think
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that unless those
friends are wealthy individuals
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who work with money or
have an expertise in that area,
00:09:42.01\00:09:45.08
it may be more
beneficial to get expert advice
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from a financial
individual as supposed to,
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you know, getting
financial information
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from someone
that is a bricklayer.
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It's meaningful to you
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because you'll get
the right information,
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and you'll get the
right type of advice.
00:10:01.00\00:10:03.53
There are many of them out there
00:10:03.57\00:10:05.20
but one of the things I think
is important is to question.
00:10:05.23\00:10:09.10
Always question,
always do your research,
00:10:09.14\00:10:11.54
ask friends and family,
00:10:11.57\00:10:13.17
ask referrals to
that specific individual
00:10:13.21\00:10:16.64
because a lot
of people out there
00:10:16.68\00:10:18.38
say they know what they're doing
00:10:18.41\00:10:19.91
but may not
necessarily have the knowledge
00:10:19.95\00:10:22.48
to take care of you.
00:10:22.52\00:10:24.19
Additionally, I
would also ask you
00:10:24.22\00:10:26.55
to take it upon yourself
00:10:26.59\00:10:28.16
to pray about
these type of investments
00:10:28.19\00:10:31.26
and these type of things that
you can do to benefit others.
00:10:31.29\00:10:34.23
Whatever thing
you're getting into
00:10:34.26\00:10:35.63
from a philanthropic perspective
00:10:35.66\00:10:37.93
and how you're ever
going to use that money,
00:10:37.97\00:10:40.04
I would ask you
to take that time,
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take a step back, be pensive,
00:10:42.60\00:10:45.84
and, and, and go to your
closet and pray about it,
00:10:45.87\00:10:49.31
because if you are
not sure of what to do,
00:10:49.34\00:10:52.38
it'd be best to
have the guidance of God
00:10:52.41\00:10:54.62
and then again,
it's also about wisdom.
00:10:54.65\00:10:57.59
It's all about asking of us to,
to help us to number our days.
00:10:57.62\00:11:01.22
And as we think of
this thing called time
00:11:01.26\00:11:04.59
and the valuation
there of, that we now have,
00:11:04.63\00:11:08.53
we can use it to the benefit
of getting access to funds
00:11:08.56\00:11:12.33
that can be
compounded through interest
00:11:12.37\00:11:15.00
and can get us a
benefit of a return.
00:11:15.04\00:11:18.17
So those are the key issues
00:11:18.21\00:11:20.18
that I'd like to
talk to you about
00:11:20.21\00:11:21.61
and to advise you about,
in reference to investing.
00:11:21.64\00:11:26.28
I'm not in this situation,
I'll just put the caveat
00:11:26.31\00:11:28.72
and then I'm not going
to tell you what to do.
00:11:28.75\00:11:30.79
I don't intend to
provide you specifics
00:11:30.82\00:11:33.79
about where to go
00:11:33.82\00:11:35.16
and how to play
the stock market,
00:11:35.19\00:11:36.59
because that's not
what I'm here to do.
00:11:36.62\00:11:38.59
My intention
here is to provide you
00:11:38.63\00:11:42.43
with the context
00:11:42.46\00:11:44.47
of what the Bible is telling us
about investing in the future,
00:11:44.50\00:11:47.87
investing in God,
investing in the kingdom.
00:11:47.90\00:11:50.64
That's what
they do here at 3ABN.
00:11:50.67\00:11:53.91
That's the overall intent
of what we try to tell others
00:11:53.94\00:11:59.05
in reference to
this Gospel of Christ.
00:11:59.08\00:12:03.22
Is it about wealth?
00:12:03.25\00:12:04.92
Is it about how
much money you make?
00:12:04.95\00:12:06.65
No, has nothing to do with that.
00:12:06.69\00:12:08.72
All it has is to do with is,
00:12:08.76\00:12:12.83
how you utilize those funds.
00:12:12.86\00:12:16.43
The primary issue that
most people forget about is,
00:12:16.46\00:12:21.07
the objective of planning.
00:12:21.10\00:12:23.34
To take into consideration
where I am currently
00:12:23.37\00:12:28.21
and trying to decide
where I am going to go.
00:12:28.24\00:12:32.08
You know, many
of the smart phones
00:12:32.11\00:12:33.58
have these location
services or GPS services
00:12:33.62\00:12:36.42
where I can punch
in where I'm going
00:12:36.45\00:12:39.02
and it will get you
to a specific location,
00:12:39.05\00:12:40.99
but it always asks
for your current location
00:12:41.02\00:12:44.83
and if you don't
know where you're at,
00:12:44.86\00:12:46.36
then how can it tell you
00:12:46.39\00:12:48.10
how to get to
where you're going?
00:12:48.13\00:12:49.80
That's the key concept here.
00:12:49.83\00:12:51.93
To know where you're
at now is a full benefit.
00:12:51.97\00:12:55.00
So you'll know
where your money is going,
00:12:55.04\00:12:57.04
you'll know what
type of adjustments
00:12:57.07\00:12:58.41
you'll have to make,
00:12:58.44\00:12:59.77
you'll know where you'll have
to cut back in certain areas
00:12:59.81\00:13:01.64
because it is
essential for you to know that,
00:13:01.68\00:13:05.85
so you can make future plans.
00:13:05.88\00:13:07.22
I knew of this
individual back in,
00:13:07.25\00:13:10.69
well, back in a
cold weather state,
00:13:10.72\00:13:12.15
we're in a cold
weather state, in a location
00:13:12.19\00:13:15.32
that we won't necessarily
have to make available to you.
00:13:15.36\00:13:18.13
But what she used to do
was, during the winter time
00:13:18.16\00:13:21.53
when she knew she would
have additional expenses
00:13:21.56\00:13:24.77
with reference to
heat and that of her house,
00:13:24.80\00:13:27.37
what she chose to do is,
00:13:27.40\00:13:28.80
she would shut
down certain rooms
00:13:28.84\00:13:30.54
she knew weren't being utilized.
00:13:30.57\00:13:32.67
And the savings
that she had from that,
00:13:32.71\00:13:34.81
she took that and
put it towards some use
00:13:34.84\00:13:38.11
in giving to a
nonprofit organization
00:13:38.15\00:13:41.55
that did outreach in
specific communities.
00:13:41.58\00:13:44.45
That's wisdom,
that's understanding
00:13:44.49\00:13:47.12
who you are and how you
can best utilize the resources
00:13:47.16\00:13:50.49
that Christ has given you.
00:13:50.53\00:13:52.06
Whatever stage you are at,
00:13:52.09\00:13:54.16
if you're living
in an Inner city,
00:13:54.20\00:13:55.83
an urban area, a rural area,
it doesn't matter who you are.
00:13:55.86\00:13:59.50
What matters is
that you know what your--
00:13:59.53\00:14:03.37
what your capacity
is, first of all to save
00:14:03.41\00:14:07.71
and secondarily your
capacity to give back.
00:14:07.74\00:14:10.81
Because remember this,
00:14:10.85\00:14:12.18
the happiest people in the world
00:14:12.21\00:14:14.08
are those that give.
00:14:14.12\00:14:16.89
So then we began the
process of talking more
00:14:16.92\00:14:18.69
so about the
different forms of free money
00:14:18.72\00:14:21.82
that's available.
00:14:21.86\00:14:23.32
And I was able to
ask Mr. Joshua Hernandez
00:14:23.36\00:14:26.80
about that specific item.
00:14:26.83\00:14:28.70
So the
conversation was interesting
00:14:28.73\00:14:30.50
and I'd like you to see
some of it here and now.
00:14:30.53\00:14:34.30
One of the things we talk about,
00:14:34.34\00:14:35.67
and one thing is
the allure that we get
00:14:35.70\00:14:37.94
when we're inviting people
to a critical think seminar,
00:14:37.97\00:14:40.64
is that there are
these programs that,
00:14:40.68\00:14:43.75
if you want to get into
the habit of saving money
00:14:43.78\00:14:47.08
there these
programs, that you can apply to
00:14:47.12\00:14:49.18
that if you save
money for specific items
00:14:49.22\00:14:52.55
like college
tuition, a car, college,
00:14:52.59\00:14:55.66
a small business,
00:14:55.69\00:14:57.03
that your money will
be matched two-to-one,
00:14:57.06\00:14:59.46
three-to-one, even four-to-one
in certain locations.
00:14:59.49\00:15:02.46
So that, $1,000 you save could
actually be $5,000 in the end,
00:15:02.50\00:15:05.60
that will be
written towards your tuition
00:15:05.63\00:15:07.50
or a car that you'd like to buy.
00:15:07.54\00:15:09.54
That's free money.
00:15:09.57\00:15:10.91
And if you understand
how that works then why not?
00:15:10.94\00:15:14.54
The same thing with an IRA
00:15:14.58\00:15:17.61
and same thing with
these different type of tools
00:15:17.65\00:15:20.92
that people can
learn to use to get wealth.
00:15:20.95\00:15:23.79
So how would you advise someone
00:15:23.82\00:15:25.15
or a parent about
these specific type of tools
00:15:25.19\00:15:27.29
that they can get
their kids involved in.
00:15:27.32\00:15:29.52
Yeah, there are some
basic tools that a parent has,
00:15:29.56\00:15:32.83
you have a young
child and getting started
00:15:32.86\00:15:35.83
would be very valuable
for their college tuition,
00:15:35.86\00:15:38.77
if you're thinking
about college tuition,
00:15:38.80\00:15:41.14
some of the most common
savings programs for children
00:15:41.17\00:15:44.87
are Coverdell
Programs and 529 plans.
00:15:44.91\00:15:48.71
Explain a Coverdell program.
00:15:48.74\00:15:50.41
So a Coverdell Program
and a 529 are pretty similar
00:15:50.45\00:15:54.15
where a parent can invest money
into an account for the child
00:15:54.18\00:16:00.16
and it's tied
to stocks and bonds
00:16:00.19\00:16:02.89
and so as the value of those,
00:16:02.92\00:16:04.73
you know, fluctuate
and potentially move up
00:16:04.76\00:16:06.80
and so will the value of
the money you're investing.
00:16:06.83\00:16:09.86
The benefit of that
is one that could be
00:16:09.90\00:16:11.57
that the money
invested into that plan
00:16:11.60\00:16:13.64
could be a tax
deduction for the parent.
00:16:13.67\00:16:17.37
The other benefit is
that, it grows, tax defers.
00:16:17.41\00:16:20.18
So as that grows in value,
there's no taxes on the growth.
00:16:20.21\00:16:24.01
And the third benefit
and another benefit is,
00:16:24.05\00:16:26.65
when it's time to use that
money for college education,
00:16:26.68\00:16:29.65
as long as it's used
for college education,
00:16:29.68\00:16:32.09
there's no taxes on
the growth of that money
00:16:32.12\00:16:34.32
and the money
that you put in there.
00:16:34.36\00:16:36.66
So it's tax deferred
and it's tax advantage
00:16:36.69\00:16:38.96
when you're using
it for college expenses
00:16:38.99\00:16:40.93
and education.
00:16:40.96\00:16:42.30
Now if you use it for
anything other than that,
00:16:42.33\00:16:44.10
then there are taxes and
penalties that can be incurred.
00:16:44.13\00:16:47.74
And so it's specific
to the appropriate use.
00:16:47.77\00:16:51.24
It is specific to
the appropriate use
00:16:51.27\00:16:52.81
for college
education, definitely.
00:16:52.84\00:16:55.71
There's another
program out there
00:16:55.74\00:16:57.68
called UTMAs and UGMAs.
00:16:57.71\00:17:00.02
And an UTMA is a
Uniform Transfers to Minors Act
00:17:00.05\00:17:05.32
and it's not
necessarily for education,
00:17:05.35\00:17:08.16
it's utilized as
a savings account
00:17:08.19\00:17:10.59
for a child for gift giving.
00:17:10.63\00:17:13.73
So you might have a grandparent
00:17:13.76\00:17:15.13
that has a
significant amount of income
00:17:15.16\00:17:18.10
or savings and
they're being taxed
00:17:18.13\00:17:19.90
or they might have some estate
planning taxes issues going on.
00:17:19.93\00:17:24.07
And so they can donate
00:17:24.11\00:17:25.44
a large amount of
that money into a plan.
00:17:25.47\00:17:28.01
They can donate up to
$26,000 into a plan for a child.
00:17:28.04\00:17:32.65
Really? Yeah.
00:17:32.68\00:17:34.02
So that could be
used for the child
00:17:34.05\00:17:35.45
and the thing about that--
00:17:35.48\00:17:36.82
I didn't know that, just
to say, that's fantastic.
00:17:36.85\00:17:39.85
Great, yeah and so
00:17:39.89\00:17:42.56
one of the things you
want to consider also is,
00:17:42.59\00:17:44.79
who's going to own that account.
00:17:44.83\00:17:46.16
So while the child is of age--
00:17:46.19\00:17:48.83
under age it's,
you know, the custodian
00:17:48.86\00:17:51.43
or the parent has control.
00:17:51.47\00:17:52.80
But as soon as that
child becomes 18 or 21,
00:17:52.83\00:17:54.90
depending on
the state you're in,
00:17:54.94\00:17:56.27
then that account
needs to go to the child
00:17:56.30\00:17:57.94
and they can do
as they wish with it.
00:17:57.97\00:18:00.08
Now another thing,
important thing about that one,
00:18:00.11\00:18:01.84
which is different than the
529 and Coverdell is the gains,
00:18:01.88\00:18:06.98
there can be taxed
gains on that account.
00:18:07.02\00:18:11.39
So you've got to
keep that in mind.
00:18:11.42\00:18:12.99
So every year the
account value grows,
00:18:13.02\00:18:15.32
a part of that could be taxed.
00:18:15.36\00:18:17.39
Which with Coverdells and 529s
00:18:17.43\00:18:19.56
they're not,
those are tax deferred,
00:18:19.59\00:18:21.63
the UTMA or UGMA
is not tax deferred.
00:18:21.66\00:18:26.23
So UGMA is also--
00:18:26.27\00:18:27.64
the child controls it later on.
00:18:27.67\00:18:29.50
And that might be good or bad
00:18:29.54\00:18:31.04
depending on the
responsibility of the child.
00:18:31.07\00:18:33.68
Coverdells and 529s,
the owner, the custodian,
00:18:33.71\00:18:37.05
the parent always
has control over it.
00:18:37.08\00:18:38.98
And so we talked
about a variety of things,
00:18:43.28\00:18:46.45
UTMAs and UGMAs and 529 programs
00:18:46.49\00:18:50.03
and many different
things that can help you.
00:18:50.06\00:18:52.96
Coverdell Programs
00:18:52.99\00:18:54.40
that go towards
educational purposes.
00:18:54.43\00:18:56.43
The fact that your grandparents,
00:18:56.46\00:18:58.30
if they have additional income,
00:18:58.33\00:19:00.07
which of course octogenarians
have a lot of Excess Income
00:19:00.10\00:19:03.74
that we know of and of
course our baby boomers
00:19:03.77\00:19:06.14
have approximately 500, 400
to 500 billion dollars worth
00:19:06.17\00:19:09.48
of buying power in this country.
00:19:09.51\00:19:11.98
That's a substantive amount
00:19:12.01\00:19:13.35
and if you know
how to use that money,
00:19:13.38\00:19:14.88
if you know where
the gifts can come from
00:19:14.92\00:19:18.15
to help support
your educational needs,
00:19:18.19\00:19:20.79
specific concerns
about your personal needs
00:19:20.82\00:19:22.92
or long-term investments
and know who owns them,
00:19:22.96\00:19:26.39
that's a real
matter of interest,
00:19:26.43\00:19:29.06
should be of interest to you
00:19:29.10\00:19:30.43
because it will help defer
some of those college costs
00:19:30.47\00:19:32.53
in the future
00:19:32.57\00:19:33.90
if you plan in accordance
to what your objectives are.
00:19:33.94\00:19:37.31
Again,
00:19:37.34\00:19:38.67
again one of the big
things to planning is,
00:19:38.71\00:19:40.94
knowing where you're headed.
00:19:40.98\00:19:42.48
If you don't know
where you're going,
00:19:42.51\00:19:43.85
you can never get there.
00:19:43.88\00:19:45.21
And that is the biggest issue
00:19:45.25\00:19:46.82
we find with people who are
not planning for retirement,
00:19:46.85\00:19:50.45
who are not planning for,
00:19:50.49\00:19:51.82
of course, the issue called
college for the young people.
00:19:51.85\00:19:54.82
And there are many other
things that come into play.
00:19:54.86\00:19:57.56
I am very enthusiastic
about this opportunity
00:19:57.59\00:20:00.83
to talk to you about
where that money can be found
00:20:00.86\00:20:04.17
and how you can
best utilize those funds.
00:20:04.20\00:20:07.17
But the biggest item
is to talk to you about
00:20:07.20\00:20:09.77
the time valuation of money.
00:20:09.80\00:20:12.14
If you have the time,
00:20:12.17\00:20:13.91
you can have small
amounts of money put away
00:20:13.94\00:20:16.81
on a monthly basis
00:20:16.85\00:20:18.25
that can accumulate
based on the rule of 72.
00:20:18.28\00:20:21.45
There are so
many different things
00:20:21.48\00:20:23.42
that can happen in your
life for the benefit of others
00:20:23.45\00:20:27.16
if you plan accordingly.
00:20:27.19\00:20:28.76
And that's one of the big issues
00:20:28.79\00:20:30.63
in reference to investing.
00:20:30.66\00:20:32.19
So understand the big picture.
00:20:32.23\00:20:34.30
Investing is a big picture item,
00:20:34.33\00:20:36.46
nowhere to go, nowhere
to get the right advice.
00:20:36.50\00:20:39.33
It's not about
looking at current events,
00:20:39.37\00:20:41.67
and looking at
magazine articles,
00:20:41.70\00:20:43.51
and seeing what other
people are doing that matters.
00:20:43.54\00:20:45.77
What matters is, not
to take the wrong approach
00:20:45.81\00:20:49.48
but to talk to the experts,
00:20:49.51\00:20:51.21
to talk to those
that value much to you
00:20:51.25\00:20:53.62
and talk to your
family and develop a plan.
00:20:53.65\00:20:56.58
That plan starts with what?
Yes, it starts with a budget.
00:20:56.62\00:21:01.19
Sit down and do one,
00:21:01.22\00:21:02.62
take a look at how
much you're spending.
00:21:02.66\00:21:04.36
It will surprise you if
you don't have one right now
00:21:04.39\00:21:07.93
and then try to
cut back, substitute
00:21:07.96\00:21:10.50
and figure out how
you can save a little bit.
00:21:10.53\00:21:14.00
Start out with a little
bit and grow it to a lot more.
00:21:14.04\00:21:17.11
And then you're going
to find a lot of sense--
00:21:17.14\00:21:18.91
big sense of peace.
00:21:18.94\00:21:20.64
You'll find that you're happier.
00:21:20.68\00:21:22.48
And you'll find
that you're doing more
00:21:22.51\00:21:25.25
when you're giving to
others rather than going out
00:21:25.28\00:21:28.98
and buying things for yourself.
00:21:29.02\00:21:30.89
Now there was a third part
of our conversation that our--
00:21:30.92\00:21:35.02
that is very important
for you to be aware of,
00:21:35.06\00:21:37.43
which has to do with taxes
00:21:37.46\00:21:39.46
and long-term
advantages of investing.
00:21:39.49\00:21:42.46
We had a chance to talk
through this specific issue.
00:21:42.50\00:21:45.17
And I would like to
bring Mr. Joshua Hernandez back
00:21:45.20\00:21:49.27
in reference to this
specific area of questioning.
00:21:49.30\00:21:52.97
What is it with taxes?
00:21:53.01\00:21:54.94
And what are the
long-term advantages?
00:21:54.98\00:21:57.11
Here's what was said.
00:21:57.15\00:21:58.88
Taxes are real.
00:21:58.91\00:22:00.28
They are. In any
type of scenario.
00:22:00.32\00:22:02.75
We find that many
people get in trouble
00:22:02.78\00:22:04.72
because they don't realize
that taxes are a major issue.
00:22:04.75\00:22:08.29
We hear of certain
movie personalities
00:22:08.32\00:22:12.13
that are caught up with
their banks being locked up
00:22:12.16\00:22:14.23
because IRS has
seized their accounts,
00:22:14.26\00:22:15.86
because they have
failed to pay back taxes.
00:22:15.90\00:22:18.33
Taxes are a relevant issue
so if you have a small account,
00:22:18.37\00:22:21.60
if you plan to take out
one of these investments early
00:22:21.64\00:22:24.97
if you are in an IRA,
00:22:25.01\00:22:26.57
you're going to
have some tax penalties
00:22:26.61\00:22:28.61
that you need to
handle with the IRS.
00:22:28.64\00:22:31.71
So the major issues
in reference to taxes.
00:22:31.75\00:22:34.28
Definitely.
00:22:34.32\00:22:36.35
Give us the
possibilities for a young person
00:22:36.38\00:22:41.32
signing up for
an IRA and saving.
00:22:41.36\00:22:45.46
Say he chooses to
retire at 59 and a half
00:22:45.49\00:22:48.30
or goes to 70 and a half.
00:22:48.33\00:22:50.40
What are the benefits for him?
00:22:50.43\00:22:51.87
Definitely, I'll
give you some examples.
00:22:51.90\00:22:54.34
So this is kind of
moving on over, now,
00:22:54.37\00:22:55.80
to not a parent
investing for their child,
00:22:55.84\00:22:58.24
but let's focus on the--
00:22:58.27\00:23:00.44
someone that's maybe 16,
17, 18 or in college education,
00:23:00.48\00:23:05.18
you know, what's the benefit?
00:23:05.21\00:23:07.02
Roth IRA's can be
a good plan for them
00:23:07.05\00:23:09.35
to invest in and you do
have to have some kind of income
00:23:09.38\00:23:12.99
in order to invest in Roth IRA
00:23:13.02\00:23:14.46
and some of the
benefits in terms of taxes is,
00:23:14.49\00:23:16.16
as you invest
money in a Roth IRA,
00:23:16.19\00:23:18.36
the growth is tax deferred
and when you pull money out
00:23:18.39\00:23:21.00
after 59 and a
half, it's tax advantage,
00:23:21.03\00:23:23.90
they don't charge you
any taxes at all on that.
00:23:23.93\00:23:26.57
So I've got a sheet,
maybe you could show them later,
00:23:26.60\00:23:30.71
it's, The High Cost of Waiting.
00:23:30.74\00:23:32.07
Okay.
00:23:32.11\00:23:33.44
And in this sheet it says,
00:23:33.48\00:23:34.81
if your goal in retirement
was to have a million dollars
00:23:34.84\00:23:38.31
and let's say you're
investing in an account
00:23:38.35\00:23:40.22
that was providing you an
eight percent rate of return
00:23:40.25\00:23:42.55
and throughout the
time it's tax deferred,
00:23:42.58\00:23:44.15
so there's no tax
happening as it's growing.
00:23:44.19\00:23:47.72
If you've got 40
years to retirement,
00:23:47.76\00:23:49.29
so you're 20 now and
you can retire at 60,
00:23:49.32\00:23:51.99
you only have to save
about $286 a month to get there.
00:23:52.03\00:23:55.66
Now not everyone has
$286 a month to save,
00:23:55.70\00:23:58.70
but I'm using that number
to get to that million dollars,
00:23:58.73\00:24:00.94
eight percent, $286 a month.
00:24:00.97\00:24:03.87
If you waited another ten years
00:24:03.91\00:24:06.88
and you started saving now,
you've 30 years to retirement.
00:24:06.91\00:24:09.41
You've got to almost, you know,
actually more than double that.
00:24:09.44\00:24:11.71
You've got to
save about $670 a month
00:24:11.75\00:24:14.98
to get to that same goal.
00:24:15.02\00:24:16.69
And if you wait
until you're, you know,
00:24:16.72\00:24:19.29
you're 40 years old,
20 years to retirement
00:24:19.32\00:24:22.56
and you want to hit that number,
00:24:22.59\00:24:23.93
you've got to invest about
$1,600 a month to get there.
00:24:23.96\00:24:26.93
So would you
rather save $600 a month
00:24:26.96\00:24:30.43
or would you
rather save $286 a month
00:24:30.47\00:24:32.93
to get to that same goal.
00:24:32.97\00:24:34.40
Starting, starting
young makes a big difference.
00:24:34.44\00:24:37.47
Time is money.
00:24:37.51\00:24:39.97
If you waste that time,
00:24:40.01\00:24:41.81
you're wasting the
opportunity for lots of funds
00:24:41.84\00:24:44.25
that could go to you.
00:24:44.28\00:24:46.35
Million dollars
is a lot of money.
00:24:46.38\00:24:48.28
They say that
00:24:48.32\00:24:49.65
there are approximately
3.07 million millionaires
00:24:49.68\00:24:53.05
in the United
States, the place of--
00:24:53.09\00:24:55.26
land of opportunity.
00:24:55.29\00:24:56.93
One of the key issues
that most of us don't realize
00:24:56.96\00:24:59.93
is this opportunity
can get away from us
00:24:59.96\00:25:02.86
if we don't think
critically about our time
00:25:02.90\00:25:05.10
and the way we use our time
and the way we save our funds.
00:25:05.13\00:25:08.04
And then you have the
United States as said,
00:25:11.81\00:25:14.31
"A land of opportunity."
00:25:14.34\00:25:16.14
We have great opportunities here
00:25:16.18\00:25:17.85
and you know
what's really exciting?
00:25:17.88\00:25:21.88
When I can look into your
eyes and see the response.
00:25:21.92\00:25:26.02
That really gets me
00:25:26.05\00:25:27.39
because as we talk to
a lot of young people,
00:25:27.42\00:25:29.76
it's quite exciting to
see their eyes light up
00:25:29.79\00:25:32.36
and say, "I didn't
know this was possible,"
00:25:32.39\00:25:34.40
"I didn't know I could do this,"
00:25:34.43\00:25:35.76
and you begin to
see in their eyes,
00:25:35.80\00:25:37.97
future millionaires.
00:25:38.00\00:25:39.33
Future wealthy people and
I use the word millionaire
00:25:39.37\00:25:42.44
and wealthy person
interchangeably, why?
00:25:42.47\00:25:46.47
Because they are
now understanding
00:25:46.51\00:25:48.38
the value of
what a dollar is about
00:25:48.41\00:25:51.38
and the importance that now,
00:25:51.41\00:25:53.08
they at age 18
or age 20 or age 22,
00:25:53.11\00:25:56.79
have a great
opportunity to gain wealth.
00:25:56.82\00:26:00.69
And if you'd speak
about it in the right ways,
00:26:00.72\00:26:02.69
which we try to do,
00:26:02.72\00:26:04.19
and share with them
the importance of tithing,
00:26:04.23\00:26:06.93
the importance of giving back,
the importance of understanding
00:26:06.96\00:26:11.03
what happy people are all about.
00:26:11.07\00:26:13.20
Then you'll begin to understand
and see the enthusiasm
00:26:13.23\00:26:17.94
that can light up in
a young person's life.
00:26:17.97\00:26:21.01
We target, as an organization,
14 to 24 year olds.
00:26:21.04\00:26:25.85
But guess what's happened?
00:26:25.88\00:26:27.22
The parents have
come into the room,
00:26:27.25\00:26:29.15
their siblings
have come into the room.
00:26:29.18\00:26:31.05
So now we're doing classes
for kids younger than 14.
00:26:31.09\00:26:35.62
They've given
back in our community
00:26:35.66\00:26:38.69
to the tune of many
thousands of dollars
00:26:38.73\00:26:41.53
so that we can give
certain kids in the community
00:26:41.56\00:26:44.17
access to music classes.
00:26:44.20\00:26:46.43
So many things are happening
00:26:46.47\00:26:47.90
when people begin to
catch the wave of excitement
00:26:47.94\00:26:51.67
of what can happen
00:26:51.71\00:26:53.04
when you
understand the long term
00:26:53.07\00:26:55.44
and what it is about investing.
00:26:55.48\00:26:57.41
So we didn't go
into a lot of detail,
00:26:57.45\00:26:59.08
but we did provide you
some relevant information
00:26:59.11\00:27:02.28
about what you can do
00:27:02.32\00:27:03.75
in reference to
understanding how taxes work,
00:27:03.79\00:27:07.02
the understanding of making sure
00:27:07.06\00:27:09.39
that you pay your taxes,
about how you can avoid taxes,
00:27:09.42\00:27:13.03
how you can defer taxes,
00:27:13.06\00:27:14.76
how you can take
better care of the money
00:27:14.80\00:27:17.27
that God has blessed you with.
00:27:17.30\00:27:19.37
I get so excited
when I see the difference
00:27:19.40\00:27:23.51
that happens in
individual's lives.
00:27:23.54\00:27:25.57
I get so excited
00:27:25.61\00:27:26.94
when a young person
comes up to me and said,
00:27:26.98\00:27:28.54
"You know what I did?
00:27:28.58\00:27:29.91
I instead of
spending all the money
00:27:29.94\00:27:32.28
that I was
bringing in this next summer
00:27:32.31\00:27:34.48
that I'm planning to save
at least half of what I make."
00:27:34.52\00:27:38.05
I get so excited when
I see these young people
00:27:38.09\00:27:41.72
changing this generational cycle
00:27:41.76\00:27:44.46
of what we think of as poverty.
00:27:44.49\00:27:47.13
Please take this information.
Take it to the Bank and save.
00:27:47.16\00:27:51.17