Millennials: Ditch Debt and Start Saving. A strategy to help you do more with your money

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Millennials:

Ditch Debt and Start Saving

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Hi. We’re Fidelity.

Our resume

• Family-owned company, 70 years experience

• Products and solutions for every stage in life

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Today’s Topics

CREATING A BUDGET

PRIORITIZING DEBT

AND SAVING

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Creating a budget

Where are you now?

FIGURE OUT YOUR INCOME

SUBTRACT YOUR

LIVING EXPENSES

SUBTRACT MONTHLY LOANS

AND DEBT PAYMENTS

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Creating a budget

Where are you now?

FIGURE OUT YOUR INCOME

SUBTRACT YOUR

LIVING EXPENSES

SUBTRACT MONTHLY LOANS

AND DEBT PAYMENTS

What’s left over?

PAY OFF DEBT

SAVE FOR SHORT- AND

LONG-TERM GOALS

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Prioritizing debt and saving

Planning for what’s leftover

BUILD AN EMERGENCY FUND

CONTRIBUTE TO YOUR PLAN

PAY OFF HIGH-INTEREST CREDIT CARDS

PAY OFF PRIVATE STUDENT LOANS

CONTRIBUTE EVEN

MORE TO YOUR PLAN

TACKLE LOWER INTEREST

LOANS LAST

STEP ONE

STEP THREE

STEP FIVE

STEP TWO

STEP FOUR

STEP SIX

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• Chatting about budgeting at the Salon

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STEP ONE

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Build An Emergency Fund

What is it?

Money you put away just for emergencies

How much do you need to save?

• 3-6 months of living expenses

• Keep it in a separate account

• Consider automatic transfers

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STEP TWO

CONTRIBUTE TO

YOUR PLAN

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Contribute to your Plan

What is it?

A tax-advantaged retirement account typically offered through work

How much do you need to save?

Start with at least 1% of your salary

• Take advantage of automatic payroll deductions

• Take advantage of starting early

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About your retirement plan

Duke University and Duke University Health System

You can enroll in the plan at any time. The

IRS Contribution limit for 2015 is $18,000.

You can select and change your investments

at any time. If no investment options are

selected, contributions start off in a Fidelity

Freedom K

®

Fund, based on your date of

birth, at the direction of your employer.

Generally Faculty and Staff paid monthly are

eligible for Duke’s contribution after completing 1

year of service and reaching age 21.

• 8.9% on your first $59,000 of salary.

• 13.2% on your salary in excess of $59,000, up

to $265,000.

Immediate vesting in your own voluntary

contributions to the plan

Vested after three years in Duke contributions

Web: www.netbenefits.com/duke

Service Center: 1-800-343-0860

Free onsite one-on-one guidance is available

with Fidelity. Schedule at

www.fidelity.com/reserve.

ELIGIBILITY

EMPLOYER

CONTRIBUTIONS

CONTACT

INVESTMENTS

VESTING

GUIDANCE

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• Retirement planning in the hot tub

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The Power of Compounding

STEP TWO

Initial monthly cost

of 1% savings boost

Potential income boost

over 25-year retirement

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The Power of Compounding

STEP TWO

$1.5M

$1M

$.5M

Age: 25

Age: 35

Age: 70

This hypothetical example assumes the following (1) $5,500 annual IRA contributions on January 1 of each year for the the age ranges shown, (2) an annual rate of return of 7% and (3) no taxes on any earnings within the IRA. The ending values do not reflect taxes, fees or inflation. If they did, amounts would be lower. Earnings and pre-tax (deductible) contributions from Traditional IRAs are subject to taxes when withdrawn. Earnings distributed from Roth IRAs are income tax free provided certain requirements are met. IRA distributions before age 59 1/2 may also be subject to a 10% penalty. Systematic investing does not ensure a profit and does not protect against loss in a declining market. This example is for illustrative purposes only and does not represent the performance of any security. Consider your current and anticipated investment horizon when making an investment decision, as the illustration may not reflect this. The assumed rate of return used in this example is not guaranteed. Investments that have potential for a 7% annual rate of return also come with risk of loss.

$796,687

$796,687

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The Power of Compounding

STEP TWO

$796,687

$1.5M

$1M

$.5M

Age: 25

Age: 35

Age: 70

This hypothetical example assumes the following (1) $5,500 annual IRA contributions on January 1 of each year for the the age ranges shown, (2) an annual rate of return of 7% and (3) no taxes on any earnings within the IRA. The ending values do not reflect taxes, fees or inflation. If they did, amounts would be lower. Earnings and pre-tax (deductible) contributions from Traditional IRAs are subject to taxes when withdrawn. Earnings distributed from Roth IRAs are income tax free provided certain requirements are met. IRA distributions before age 59 1/2 may also be subject to a 10% penalty. Systematic investing does not ensure a profit and does not protect against loss in a declining market. This example is for illustrative purposes only and does not represent the performance of any security. Consider your current and anticipated investment horizon when making an investment decision, as the illustration may not reflect this. The assumed rate of return used in this example is not guaranteed. Investments that have potential for a 7% annual rate of return also come with risk of loss.

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STEP THREE

PAY OFF HIGH-INTEREST

CREDIT CARDS

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Pay off high-interest credit

cards

Why is it important?

You could be paying more in interest

than the cost of the item

How much should you pay off?

More than the monthly minimums

until the balance is paid

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SO, YOU JUST PUT THAT $2,000

TV ON YOUR CREDIT CARD

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COST OF YOUR FLAT SCREEN TV

SO, YOU JUST PUT THAT $2,000

TV ON YOUR CREDIT CARD

STEP THREE

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COST OF YOUR FLAT SCREEN TV

MINIMUM MONTHLY PAYMENT

SO, YOU JUST PUT THAT $2,000

TV ON YOUR CREDIT CARD

STEP THREE

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COST OF YOUR FLAT SCREEN TV

MINIMUM MONTHLY PAYMENT

TIME FRAME TO PAY OFF DEBT

SO, YOU JUST PUT THAT $2,000

TV ON YOUR CREDIT CARD

STEP THREE

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COST OF YOUR FLAT SCREEN TV

MINIMUM MONTHLY PAYMENT

TIME FRAME TO PAY OFF DEBT

SO, YOU JUST PUT THAT $2,000

TV ON YOUR CREDIT CARD

STEP THREE

$2,000

$40

17 Years

INTEREST PAID

$2,500

THAT’S MORE THAN

DOUBLE THE ORIGINAL

COST OF THE TV!

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STEP FOUR

PAY OFF PRIVATE

STUDENT LOANS

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Pay off private student loans

Why is it important?

• Higher interest rates

• Interest is deductible only in some cases

How much should you pay off?

• Prioritize debt over 8% interest

• Pay more than the monthly minimums

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STEP FIVE

CONTRIBUTE EVEN MORE TO

YOUR RETIREMENT SAVINGS

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Contribute even more to

your retirement savings

Why is it important?

• It gives your money more time to grow

• Earning interest can be more beneficial than paying off debt

How much should you contribute?

• Save a percentage of your raise each year

• Increase your savings amount annually

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• Learning about Mutual Funds while visiting the farm

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STEP SIX

TACKLE LOWER INTEREST

LOANS LAST

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Tackle lower interest

loans last

Why’s it important?

• Car payments and government student loans have low interest rates;

some interest is tax deductible

• You could benefit more from investing your money

How much should I pay off?

• Make just the monthly payments

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• Balance paying off debt and saving for the future with other goals

• Cinch

SM

, our free budgeting tool, can help

SAVING FOR ADDITIONAL GOALS

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Visit mymoney.fidelity.com

Education

Access articles, videos, tools, and more

Tools

Try Cinch, an easy way to track your spending and

saving

UPDATES

Follow

@ Fidelity

to get daily updates and news. You

can also check out our Facebook page for more

helpful info.

RESOURCES TO HELP

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Keep in mind that investing involves risk. The value of your

investment will fluctuate over time and you may gain or lose

money.

Fidelity does not provide legal or tax advice. The information

herein is general in nature and should not be considered legal

or tax advice. Consult an attorney or tax professional

regarding your specific situation.

Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900

Salem Street, Smithfield, RI 02917

©2014 FMR LLC. All rights reserved.

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