Financial planning and personal finance / E. Thomas Garman, Raymond E. Forgue, Mariya Yesseleva-Pionka, James Murray

Includes index.

Preface
About the authors
Acknowledgements
Part 1: Financial planning
Chapter 1: Understanding personal finance
1.1 Achieving personal financial success
1.1a The five fundamental steps in the financial planning process
1.1b You must plan for financial success and happiness
1.1c You must spend less so you can save and invest more
1.1d What you will accomplish studying personal finance
1.1e Replace your obsolete knowledge
1.2 The economy affects your personal financial success
1.2a How to tell where we are in the business cycle
1.2b The business cycle
1.2c How to tell the future direction of the economy
1.2d The future direction of inflation and interest rates
1.3 Think like an economist when making financial decisions
1.3a Consider opportunity costs when making decisions
1.3b Identify marginal utility and costs in decision making
1.3c Factor your marginal income tax rate when making financial decisions
1.3d Know the tax-exempt income
1.3e Tax benefits and investment property
1.4 Perform time value of money calculations
1.4a There are only two common questions about money
1.4b Calculating future values
1.4c Finding present values is called discounting
1.5 Make smart money decisions at work
1.5a Open the new employee orientation package
1.5b Public health system
1.5c Age Pension and personal superannuation
1.6 Where to seek expert financial advice
1.6a Not every financial adviser has your best interests in mind
1.6b How financial planners are compensated
1.6c Questions to ask a financial planner
Chapter 2: Career planning
2.1 Developing your career plan
2.1a Clarify your values and interests
2.1b Consider your current interests and possible career opportunities
2.1c Identify one or more desired career fields
2.1d Review your abilities, experiences and education
2.1e Know your preferred work-style personality
2.1f Take advantage of professional and social networking
2.1g Prospective employers and your credit report
2.1h Align yourself with tomorrow’s employment trends
2.1i Freelancing in the ‘gig economy’ and entrepreneurship
2.1j Finalise your career plan
2.2 Financial and legal aspects of employment
2.2a Is university worth the cost?
2.2b Place dollar values on employee benefits
2.2c Know your legal employment rights
2.3 Practise effective employment search strategies
2.3a Assemble an attention-getting curriculum vitae (CV)
2.3b How to search for and target preferred employers
2.3c Identify specific job opportunities
2.3d Write an effective cover letter
2.3e Obtain strong reference letters
2.3f Formally apply for the job
2.3g Interview for success
2.3h How to compare salary offers
2.3i Ask for the job
2.3j Wait and be patient
2.3k Negotiate and accept the job
2.3l How to move up at work
2.3m Getting paid ‘right’ in your job
2.3n Periodically update your career plan
Chapter 3: Financial statements, tools and budgets
3.1 Financial values, goals and strategies
3.1a Values define your financial success
3.1b Saving is your single most important financial task
3.1c Examples of financial goals
3.1d Financial goals follow your values
3.1e Financial strategies help guide your financial success
3.1f Wealth-building principles for life
3.2 Financial statements measure your financial health and progress
3.2a The balance sheet is a snapshot of your financial status right now
3.2b How to increase your net worth
3.2c The cash-flow statement tracks where your money came from and went
3.3 Collect and organise your financial records to save time and money
3.4 Money topics to discuss with a partner
3.5 Reaching your goals through budgeting: your spending/savings action plan
3.5a Action before: set financial goals
3.5b Action before: make and reconcile budget estimates
3.5c Action before budgeting period: plan cash flows
3.5d Action during the budgeting period: control spending
3.5e Action after: evaluate budgeting progress to make needed changes
Part 2: Financial management
Chapter 4: Managing income taxes
4.1 Progressive income taxes and the marginal tax rate
4.1a The progressive nature of personal income tax
4.1b The marginal tax rate is applied to the last dollar earned
4.1c Use your marginal tax rate to help make financial decisions
4.1d Your effective marginal tax rate is higher
4.2 Five steps in calculating your income taxes
4.2a Determine your total income
4.2b Determine and report your gross income after subtracting exclusions
4.2c Subtract your itemised deductions
4.2d Subtract the value of offsets, rebates and credits
4.2e Calculate the balance due or the amount of your refund
4.3 Strategies to reduce your income taxes
4.3a Practise legal tax avoidance, not tax evasion
4.3b Strategy: reduce taxable income via your employer
4.3c Strategy: prune taxable investments
4.3d Strategy: make tax-sheltered investments
4.3e Strategy: defer income
4.3f Strategy: make the most of your deductions
4.3g Strategy: shift income to family
4.3h Strategy: buy and manage a real estate investment
Chapter 5: Managing savings accounts
5.1 What is monetary asset management?
5.1a Who provides monetary asset management services?
5.2 Open cheque, savings and cash management accounts
5.2a Cheque/transaction accounts
5.2b Cash management accounts
5.2c Savings accounts
5.2d Term deposit accounts
5.3 Establish ownership of assets wisely
5.4 Electronic money management
5.4a Why use electronic money management?
5.4b Cards used to access your money
5.4c Liability limits for lost or stolen debit cards
5.4d Electronic funds transfer error resolution process
5.4e Avoid automatic billing, renewal and subscription services
5.4f Protect your privacy
5.4g Bitcoin is a ‘fad’ virtual currency
5.5 The psychology of money management
5.5a Managing money and making financial decisions are different
5.5b People connect strong emotions to money
5.5c How to talk about financial matters
5.5d Complications brought by remarriage
5.5e Check your overall financial health online
Chapter 6: Building and maintaining good credit
6.1 Advantages and disadvantages of using credit
6.1a Advantages of using credit
6.1b Disadvantages of using credit
6.1c Identity theft
6.2 Three ways to set your own debt limit
6.2a Method 1: Continuous-debt method
6.2b Method 2: Debt payments-to-disposable income method
6.2c Method 3: Debt-to-income method
6.2d Keep student loan debt under control
6.3 Obtaining credit and building a good credit reputation
6.3a The credit application and credit report
6.3b Prescreened, invitation-to-apply or preapproved
6.3c The lender decides on the application
6.3d The lender decides on the interest rate
6.3e How to build your foundation for a good credit history
6.3f Improving your credit history improves your credit score
6.3g Credit scores
6.3h Credit monitoring is a waste of money
6.3i How to fix errors in your credit report
6.3j Time limits on adverse information in credit reports
6.3k Another person’s credit history
6.3l Effects of divorce on your credit
6.4 Dealing with overindebtedness
6.4a Signs of overindebtedness
6.4b Federal law regulates debt collection practices
6.4c Ways to get out from under excessive debt
6.4d Bankruptcy as a last resort
Chapter 7: Credit cards and consumer loans
7.1 Credit cards and other types of open-end credit
7.1a Open-end credit
7.1b Two types of organisations issue open-end credit
7.1c Revolving lines of credit
7.2 Managing credit cards wisely
7.2a Credit statements
7.2b Computation of finance charges
7.2c Liability for lost or stolen cards
7.2d Correcting errors on your credit card statement
7.3 Sources of consumer loans
7.4 Instalment loans
7.4a The loan contract
7.4b Unsecured and secured loans
7.4c Variable-rate or fixed-rate loans
7.4d Alternative lenders offer high-priced loans
7.5 Calculating interest on consumer loans
7.5a Calculating an instalment loan payment
7.5b Calculation of the finance charges and APR for instalment loans
7.6 Planned buying
7.6a Prioritise your wants
7.6b Conduct preshopping research
7.6c Know the price you should expect to pay
7.6d Fit your budget to the purchase
7.7 Comparison shop to find the best buy and financing
7.7a Avoid long-term borrowing
7.7b Comparison shop between financing and leasing
7.7c Pitfalls of leasing to avoid
7.7d Make the decision at home using a decision-making matrix
7.8 Complain when appropriate
Chapter 8: Obtaining affordable housing
8.1 Should you rent or buy your home?
8.1a Renting housing is less expensive in the short term
8.1b Tenants have rights even in the absence of a written lease
8.1c Owned housing is less expensive in the long term
8.1d So who pays more – renters or owners?
8.2 What does it cost to buy a home?
8.2a Pay upfront costs at the settlement
8.2b Your monthly costs include both principal and interest
8.2c Taxes and insurance
8.2d Make a decision to buy (if it makes sense) based on all costs
8.3 The steps in home buying
8.3a Step 1: Get your finances in order
8.3b Step 2: Get preapproved for a mortgage
8.3c Step 3: Search for a home online and in person
8.3d Step 4: Agree to terms with the seller
8.3e Step 5: Formally apply for a mortgage loan
8.3f Step 6: Prepare for the settlement
8.3g Step 7: Sign your name on settlement day
8.3h Buying a foreclosed property
8.4 Financing a home
8.4a The mathematics of mortgage loans
8.4b Three factors that affect the mortgage payment
8.4c Types of mortgage loans
8.4d Other housing financing arrangements
8.5 Selling a home
8.5a Should you list with a real estate agent or try to sell a home yourself?
8.5b Selling carries its own costs
Part 3: Income and asset protection
Chapter 9: Managing property and liability risk
9.1 Risk and risk management
9.1a People often misunderstand the concept of risk
9.1b Apply the risk-management process
9.2 Understanding how insurance works
9.2a Hazards make losses more likely to occur
9.2b Only fortuitous and financial losses are insurable
9.2c The principle of indemnity limits insurance payouts
9.2d Ways to pay less for insurance and still maintain sufficient coverage
9.2e Risk is reduced for the insurer through the law of large numbers
9.2f Each insured benefits even if one does not suffer a loss
9.2g How companies select among insurance applicants
9.2h Who arranges insurance?
9.3 Homeowner’s insurance
9.3a Coverages
9.3b Homeowner’s insurance and natural disasters
9.3c Buying homeowner’s insurance
9.4 Car insurance
9.4a Losses covered
9.5 Buy specialised protection for other loss exposures
9.5a Umbrella liability insurance
9.5b Flood and earthquake insurance
9.5c Professional liability insurance
9.5d Floaters
9.6 How to collect on your property and liability losses
9.6a Step 1: Contact your insurance agent about your loss
9.6b Step 2: Document your loss
9.6c Step 3: File your claim
9.6d Step 4: Sign a release
Chapter 10: Planning for health care expenses
10.1 Medicare and you
10.1a Health care today in Australia
10.1b Health care and the ACC in New Zealand
10.1c The Medicare levy and surcharge
10.1d Health insurance rebates and lifetime health cover
10.1e Private health insurance in Australia
10.1f Private health insurance in New Zealand
10.1g Scientific advances and health insurance
10.1h Ambulance cover
10.2 Types of health care plans
10.2a Employer-provided group health care plans
10.2b The four health insurance tiers
10.3 Your health insurance benefits and limits
10.3a What types of care are covered?
10.3b Who is covered?
10.3c How much is the premium?
10.3d Making changes in health care plans
10.4 Planning for long-term custodial care
10.4a Levels of care
10.4b Things to consider if purchasing long-term care insurance
10.5 Disability income insurance
10.5a Government disability insurance
10.5b Who needs disability insurance?
10.5c What is your level of need?
10.5d What policy provisions best meet your needs?
10.6 Advance directive documents
10.6a A living will specifies end-of-life medical treatments
10.6b A substitute decision maker designates someone to make health care decisions
10.6c The enduring power of attorney appoints someone to handle legal and personal finances
Chapter 11: Life insurance planning
11.1 How much life insurance do you need?
11.1a What financial needs must be met upon your death?
11.1b Three ways you can meet these financial needs
11.1c What dollar amount of life insurance do you need?
11.2 There are only two types of life insurance
11.2a Term life insurance is pure protection
11.2b Some cash-value life insurance has a fixed return
11.3 Understanding your life insurance policy
11.3a Policy terms and provisions unique to life insurance
11.3b Policy features unique to cash-value life insurance
11.3c Settlement (or payout) options specify how to pay the death benefit
11.3d Delete ‘Mum’ as the beneficiary on life insurance policies
11.4 How to buy life insurance
11.4a Integrate your life insurance into your financial plan
11.4b Buy life insurance from a financially strong company
11.4c Fair prices for term life insurance
11.4d When buying life insurance, get a great price online
11.4e Or contact a local insurance agent
11.4f Sales commissions can amount to 90 per cent of the annual premium
11.4g Signs of an unethical life insurance agent
Part 4: Investments
Chapter 12: Investment fundamentals
12.1 Starting your investment program
12.1a Before you invest
12.1b Prioritise your investing goals
12.1c Get the money to invest
12.1d Investing is more than saving
12.1e What long-term investment returns are possible?
12.1f Capital gains plus dividends equals one’s total return
12.1g Your investing future looks promising
12.1h Creating wealth just takes starting early
12.2 Identify your investment philosophy and invest accordingly
12.2a You must learn to handle investment risk
12.2b Investors demand a risk premium
12.2c What is your investment philosophy?
12.2d Should you take an active or passive investing approach?
12.2e Identify the kinds of investments you want to make
12.2f Deal only with financial advisers who are fiduciaries
12.3 Risks and other factors affect the investor’s return
12.3a Random risk is reduced by diversification, eventually
12.3b Market risk
12.3c Types of investment risks
12.3d Transaction costs reduce returns
12.3e Leverage may or may not increase returns
12.4 Accept the realities of the market and avoid investing mistakes
12.4a Long-term investors understand bull and bear markets and corrections
12.4b Long-term investors accept substantial market volatility
12.4c Long-term investors do not practise market timing
12.4d Long-term investors avoid trading mistakes
12.4e Market timing loses money
12.4f Avoid herd behaviour
12.4g Ignore 24-hour financial news chatter
12.5 Four safe and effective strategies for long-term investors
12.5a Strategy 1: Buy and hold anticipates long-term economic growth
12.5b Strategy 2: Portfolio diversification reduces portfolio volatility
12.5c Strategy 3: Dollar-cost averaging buys at ‘below-average’ costs
12.5d Strategy 4: Asset allocation keeps you in the right investment categories for your time horizo
12.6 Creating your own investment plan
Chapter 13: Investing in shares and bonds
13.1 The role of shares and bonds in investments
13.1a Ordinary shares
13.1b Preference shares
13.1c Bonds
13.1d An illustration of shares and bonds: Running Paws Cat Food Company
13.2 How to evaluate ordinary shares
13.2a Use beta to compare a share to similar investments
13.2b Most investors use fundamental analysis to evaluate shares
13.2c Some investors use technical analysis to evaluate shares
13.2d Evaluate shares using corporate earnings
13.2e Calculating a share’s potential rate of return in five steps
13.3 Use the internet to evaluate and select shares
13.3a Begin by setting criteria for your share investments
13.3b Investor education is widely available online
13.3c Why use online share calculators?
13.3d Set up your portfolio online
13.3e Use share-screening tools
13.3f Get a sense of the history of a share
13.3g Go to the source for company information
13.3h Use share analysts’ research reports
13.3i Read research newsletters
13.3j Be aware of economic trends
13.3k Pay attention to securities market indexes
13.3l Securities exchanges (share markets)
13.3m Looking up a share price
13.3n Using portfolio tracking to watch your investments
13.4 Buying and selling shares
13.4a Opening a brokerage account
13.4b Broker commissions and fees
13.4c How to order share transactions
13.4d Margin buying and selling short are risky trading techniques
13.5 Investing in bonds
13.5a Corporate bonds
13.5b Government securities
13.5c Evaluating bond prices and returns
13.5d Pricing a bond in today’s market
Chapter 14: Managed and exchange traded funds
14.1 Why invest in managed funds?
14.1a The net asset value is the price you pay for a managed fund share
14.1b Managed fund dividend income and capital gains distributions
14.1c Managed fund services
14.1d Managed and exchange traded funds are similar
14.2 Managed fund objectives
14.2a Income objective
14.2b Growth objective
14.2c Growth and income objective
14.3 Managed fund investing fees and charges
14.3a Management fees
14.3b Performance fees
14.3c Use websites to compare managed fund fees
14.3d What’s best?
14.3e Invest in index funds and ETFs for the lowest fees
14.4 How to select the funds in which you should invest
14.4a Step 1: Review your investment philosophy
14.4b Step 2: Review your investment goals
14.4c Step 3: Eliminate funds inappropriate for your investment goals
14.4d Step 4: Choose low fee funds
14.4e Step 5: Determine if investment advice is needed
14.4f Step 6: Screen and compare funds that meet your investment criteria
14.4g Step 7: Monitor your managed fund portfolio
Chapter 15: Real estate and alternative investments
15.1 How to make money investing in real estate
15.1a What to do before investing in real estate
15.1b Question 1: Can you make current income while you own?
15.1c Question 2: Can you profit when you sell the property?
15.2 Take advantage of beneficial tax treatments
15.2a Depreciation is a tax deduction
15.2b Interest may also be a tax deduction
15.2c Capital gains tax rules
15.2d Home rental income
15.3 Pricing and financing real estate investments
15.3a Pay the right price
15.3b Financing a real estate investment
15.4 Disadvantages of real estate investing
15.5 Investing in collectibles, precious metals and gems
15.5a Collectibles
15.5b Gold and other precious metals
15.5c You can invest in gold in several ways
15.5d Investing in other metals – silver, platinum, palladium and rhodium
15.5e Precious stones and gems
15.5f Speculate by trading in currencies
15.5g Alternative coins and cryptocurrencies
15.5h Scams abound in collectibles, precious metals and gems
15.6 Investing in options and commodity futures contracts
15.6a Options allow you to buy or sell an asset at a predeterminedprice
15.6b Buying and selling commodities futures contracts
Chapter 16: Managed funds/superannuation
16.1 Understanding government pensions
16.1a Age Pension eligibility criteria
16.1b Your taxes pay Age Pension and Medicare benefits
16.1c It takes 10 years to qualify for the Age Pension retirement benefits
16.1d Obtain an estimate of your Age Pension retirement benefits
16.2 Choosing a managed superannuation fund
16.2a Performance
16.2b Fees
16.2c Insurance
16.2d Investment options
16.2e Comparison of superannuation funds
16.2f Type 1: Accumulation funds are most common today
16.2g Type 2: Defined-benefit plans are yesterday’s standard
16.3 Managing your super
16.3a Additional super contributions
16.3b Spouse contributions
16.3c Nominating your beneficiaries
16.3d Conditions of release
16.3e Consolidating your super accounts
16.3f Self-managed super funds
16.3g Additional KiwiSaver contributions
16.3h Early KiwiSaver withdrawals
16.3i Transfers between Australian super and KiwiSaver
16.4 Retirement advice for investors
16.4a Diversification and modern portfolio analysis
16.4b Financial advice for DIY investors
Chapter 17: Retirement and estate planning
17.1 Setting a retirement savings goal
17.1a What happens if you don’t save for retirement?
17.1b How to find the money to save
17.1c Projecting your annual retirement expenses and income
17.1d An illustration of retirement needs
17.1e Suggestions for funding Erik’s retirement goal
17.2 Do not outlive your money
17.2a Figure out how many years your money will last in retirement
17.2b Some people buy an annuity to ‘guarantee’ a portion of their retirement income
17.3 Retirement lifestyle planning
17.3a Stages of retirement
17.3b Working past pension age
17.4 Downsizing
17.4a Free up capital by downsizing your home
17.4b Reverse mortgages
17.4c Selling a business and succession planning
17.5 Estate planning
17.5a Start right now by setting up a checklist for your estate planning
17.5b Using trusts
17.5c Digital assets
Chapter 18: Estimating social security benefits
18.1 Qualifying for social security benefits
18.2 Medicare, income and asset test and Australian residency
18.2a Income and asset tests
18.2b Residency requirements
18.3 Types of social security benefits available in Australia
18.3a JobSeeker Payment
18.3b Parenting Payment and the Family Tax Benefit
18.3c ABSTUDY and Austudy
18.3d Disability Support Pension
18.3e Carer Payments and Carer Allowance
18.3f Youth Allowance
18.3g Australian Government Age Pension
18.3h Superseded benefits
18.3i Other allowances and supplements
18.3j Department of Veterans’ Affairs benefits and payments
18.3k Staying up-to-date
18.4 Income support for working-age New Zealanders
18.4a Jobseeker support
18.4b Student allowance – StudyLink
18.4c Disability Allowance and Supported Living Payment
18.4d Parenting
18.4e Carers
18.4f Other allowances
18.5 New Zealand Superannuation
18.5a Qualifying age and residence for NZ Super
18.5b Receiving overseas pensions in New Zealand
Appendix A: Present and future value tables
Glossary
Index

Financial Planning and Personal Finance 1st Edition is the most comprehensive text on the market, covering both professional Financial Planning and Personal Finance. Using a structured, step-by-step approach, you will learn about financial planning from a professional and personal perspective: how to save and invest, manage loans, file taxes, and decrease credit card debt. Real-life scenarios covering a wide range of financial challenges enable you to appreciate the relevance of key concepts, and useful perspectives from personal finance and financial planning experts helps you apply those concepts. Maths-based examples illustrate the critical importance of achieving long-term financial goals through investing. Get up to speed with a variety of digital financial management tools with expert, up-to-date coverage of FinTech, and access helpful resources via your instructor.--Provided by VitalSource