Transcription
13thEditioPERSONALFINANCIALPLANNINGLawrence J. Gitman, Ph.D., CFP - San Diego State UniversityMichael D. Joehnk, Ph.D., CPA - Arizona State UniversityRandall S. Billingsley, Ph.D., FRM, CPA - Virginia Tech/SOUTH-WESTERNCENGAGE Learning'
Brief ContentsPreface, ixAbout the Authors, xviiiPARTIChapter 1Chapter 2Chapter 3FOUNDATIONS OF FINANCIAL PLANNING, 1Understanding the Financial Planning Process, 2Using Financial Statements and Budgets, 41Preparing Your Taxes, 80PART 2Chapter 4Chapter 5MANAGING BASIC ASSETS, 117Managing Your Cash and Savings, 118Making Automobile and Housing Decisions, 154PART 3Chapter 6Chapter 7MANAGING CREDIT, 207Using Credit, 208Using Consumer Loans, 250PART 4Chapter 8Chapter 9Chapter 10MANAGING INSURANCE NEEDS, 285Insuring Your Life, 286Insuring Your Health, 324Protecting Your Property, 363PART 5Chapter 11Chapter 12Chapter 13MANAGING INVESTMENTS, 397Investment Planning, 398Investing in Stocks and Bonds, 445Investing in Mutual Funds, ETFs, and Real Estate, 490PART 6Chapter 14Chapter 15RETIREMENT AND ESTATE PLANNING, 537Planning for Retirement, 538Preserving Your Estate, 578Appendix AAppendix BAppendix CAppendix DAppendix ETable ofTable ofTable ofTable ofUsing aIndex, 622Brief ContentsFuture Value Factors, 616Future Value Annuity Factors, 617Present Value Factors, 618Present Value Annuity Factors, 619Financial Calculator, 620
ContentsPreface, ixAbout the Authors, xviiiPART 1FOUNDATIONS OF FINANCIAL PLANNING, 1CHAPTER 1Understanding the Financial Planning Process, 2The Rewards of Sound Financial Planning, 3The Persona/ Financiai Planning Process, 7WORKSHEET 1.1 Summary of Personal Financial Goals, 14From Goals to Plans: A Lifetime of Planning, 15WORKSHEET 1.2 Analyzing the Benefit of a Second Income, 21The Planning Environment, 29What Determines Your Personal Income?, 34CHAPTER 2Using Financial Statements and Budgets, 41Mapping OutYour Financial Future, 42The Balance Sheet: How Much Are You Worth Today?, 44WORKSHEET2.1 Balance Sheet for Rick and Beth Fletcher, 46The Income and Expense Statement: What We Earn and Where It Goes, 49WORKSHEET 2.2 Income and Expense Statement for Rick and Beth Fletcher, 51Using Your Personal Financial Statements, 55Cash In and Cash Out: Preparing and Using Budgets, 59WORKSHEET 2.3 The Fletchers' Annual Cash Budget by Month, 61WORKSHEET 2.4 The Fletchers' Budget Control Schedule for January, February,and March 2016, 66TheTime Value of Money: Putting a Dollar Value on Financial Goals, 67CHAPTER 3Preparing Your Taxes, 80Understanding Federal IncomeTax Principles, 81It's Taxable Income that Matters, 85Calculating and Filing yourTaxes, 91WORKSHEET 3.1 2011 Tax Return (Form 1040EZ) for Hiro Tanaka, 96WORKSHEET 3.2 2011 Tax Return (Form 1040) for the Sullivans, 99Other Filing Considerations, 103Effective Tax Planning, 109PART 2CHAPTER 4ARIEL SKELLEY/BLEND IMAGES/JUPITERIMAGESMANAGING BASIC ASSETS, 117Managing Your Cash and Savings, 118FUSE/JUPITER IMAGESThe Role of Cash Management in Personal Financial Planning, 119Today's Financial Services Marketplace, 121A Full Menu of Cash Management Products, 125Maintaining a Checking Account, 133WORKSHEET 4.1 An Account Reconciliation Form: Jeremy Bentley's May 2015 Statement, 140Establishing a Savings Program, 141Contentsv
CHAPTER 5PARTSMaking Automobile and Housing Decisions, 154Buying an Automobile, 155Leasing a Car, 164WORKSHEET 5.1 Comparing Stella Rather's Automobile Lease versus Purchase Costs, 168Meeting Housing Needs: Buy or Rent?, 169WORKSHEET 5.2 Rent-or-Buy Cost Comparison, 175How Much Housing Can You Afford?, 176WORKSHEET 5.3 Home Affordability Analysis for the Compton Family, 184The Home-Buying Process, 186Financing the Transaction, 192WORKSHEET 5.4 Mortgage Refinancing Analysisfor the De Luca Family, 199MANAGING CREDIT, 207CHAPTER 6Using Credit, 208The Basic Concepts of Credit, 209Credit Cards and OtherTypes of Open Account Credit, 215WORKSHEET 6.7 Eva/uaf/ng Ybur Cred/f, 216Obtaining and Managing Open Forms of Credit, 230Using Credit Wisely, 239CHAPTER 7Using Consumer Loans, 250Basic Features of Consumer Loans, 251Managing Your Credit, 261Single-Payment Loans, 264WORKSHEET 7.1 Tracking Your Consumer Debt, 265Installment Loans, 271WORKSHEET 7.2 To Borrow or Not to Borrow, 278PART 4MANAGING INSURANCE NEEDS, 285CHAPTER 8Insuring Your Life, 286Basic Insurance Concepts, 287Why Buy Life Insurance?, 289How Much Life Insurance Is Right forYou?, 290WORKSHEET 8.1 Determining the Meeses' Need for Life Insurance, 295What Kind of Policy Is Right forYou?, 297Buying Life Insurance, 308Key Features of Life Insurance Policies, 314CHAPTER 9Insuring Your Health, 324The Importance of Health Insurance Coverage, 325Health Insurance Plans, 327Health Insurance Decisions, 334Medical Expense Coverage and Policy Provisions, 339WORKSHEET 9.1 Health Insurance Checklist, 341Long-Term-Care Insurance, 348Disability Income Insurance, 353WORKSHEET 9.2 Estimating Disability Income Insurance Needs, 354Contents:0BURN, 2009/USED UNDER LICENSE FROMSHUTTERSTOCK.COMDON BAYLEY/IST0CKPH0T0 COM
CHAPTER 10PART 5Protecting Your Property, 363Basic Principles of Property Insurance, 364Homeowner's Insurance, 368Automobile Insurance, 378Other Property and Liability Insurance, 387Buying Insurance and Settling Claims, 388MANAGING INVESTMENTS, 397CHAPTER 11Investment Planning, 398The Objectives and Rewards of Investing, 399WORKSHEET 11.1 Determining the Amount of Investment Capital, 403Securities Markets, 408Making Transactions in the Securities Markets, 415Becoming an Informed Investor, 422Online Investing, 427Managing Your Investment Holdings, 432WORKSHEET 11.2 Keeping Tabs on Your Investment Holdings, 437CHAPTER 12Investing in Stocks and Bonds, 445The Risks and Rewards of Investing, 446Investing in Common Stock, 454Investing in Bonds, 469CHAPTER 13Investing in Mutual Funds, ETFs, and Real Estate, 490Mutual Funds and Exchange Traded Funds: Some Basics, 491Types of Funds and Fund Services, 504Making Mutual Fund and ETF Investments, 512Investing in Real Estate, 523PART 6STAN HONDA/AFP/GETTY IMAGES/NEWSCOMRETIREMENT AND ESTATE PLANNING, 537CHAPTER 14Planning for Retirement, 538An Overview of Retirement Planning, 539WORKSHEET 14.1 Estimating Future Retirement Needs, 543Social Security, 548Pension Plans and Retirement Programs, 552Annuities, 565CHAPTER 15Preserving Your Estate, 578Principles of Estate Planning, 579Thy Will Be Done . . ., 586WORKSHEET 15.1 A Checklist of Items to Keep in a Safe-Deposit Box, 593Trusts, 598Federal Unified Transfer Taxes, 602Calculating Estate Taxes, 606WORKSHEET 15.2 Computing Federal Estate Tax Due, 608Estate Planning Techniques, 609STAN HONDA/AFP/GETTY IMAGES/NEWSCOMContentsvii
Appendix AAppendix BAppendix CAppendix DAppendix EIndex, 622viiiContentsTable of Future Value Factors, 616Table of Future Value Annuity Factors, 617Table of Present Value Factors, 618Table of Present Value Annuity Factors, 619Using a Financial Calculator, 620
PART 1 FOUNDATIONS OF FINANCIAL PLANNING, 1 CHAPTER 1 Understanding the Financial Planning Process, 2 The Rewards of Sound Financial Planning, 3 The Persona/ Financiai Planning Process, 7 WORKSHEET 1.1 Summary of Personal Financial Goals, 14 From Goals to Plans: A Lifetime of Planning, 15 WORKSHEET 1.2 Analyzing the Benefit of a Second Income .
