Maybe We Should Start Somewhere Else to Grow Your Assets Safely

Everyone (including Financial Advisors) needs to decide “where do I start” when trying to optimize our financial plans and strategies.  I think it’s possible that we have been starting in the wrong place.  Let me tell you what I mean.

The three types of assets each of us has in our lives are:

1. Lifestyle Assets: The money you spend on your home, food, school, cars etc.  What it costs to live the way you want to live.  This is not a real exciting place to go find money to invest more for retirement.
2. Accumulated Assets: The chunks of money you have saved up over the years in IRAs, 401ks, CDs, Insurance Contracts, Annuities etc.  This is where most Advisors and clients start and the goal is usually “how do I make a higher rate of return so I don’t have to work until I am 90?
3. Transferred Assets: This is the money that you are unnecessarily and unknowingly transferring away to others through overpaid taxes, inefficient mortgage structures, credit card interest, misuse of qualified plan contributions, car loans etc. 

My thoughts are that we may have been starting in the wrong place for all these years.  To make higher interest in our accumulated assets we generally need to take more risk which means if things don’t go as planned we end up even further behind than when we started.  For example: to make an extra $6,000 in an $100,000 account we need to earn another 6% each year on top of whatever we currently earn.  To do that involves taking a lot more risk in most cases. 

Now, if we start by eliminating all of the transfers or wealth in our lives first it’s a very different story.  To make an extra $6,000 a year for retirement (most of us are way behind on saving for retirement in the States) we only need to find $500 a month of transferred assets like overpaid taxes, interest on car loans and credit cards, inefficient mortgage planning etc.   I can tell you after five years of looking at financial plans from people all over the country that $500 a month is on the low end of what we find and can easily fix. 

My point here is that if there is no risk at all in finding money you are currently losing and investing that for retirement then maybe we should start there first and then after that look to your accumulated assets and ask “should we keep them where they are or move them elsewhere for more safety/higher returns/better tax treatment etc.?”

No matter what order you go in make sure that you have a good Wealth Transfer Specialist on your team in addition to your Stock Broker, Money Manager or Investment Advisor who focusses solely on accumulated assets. 

God Bless you with much success,

Charlie Jewett

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Tags: annuities, equity management, Estate Planning, Financial Planning, insurance strategies, legacy planning, missed fortune, Mortgage Planning, Retirement Planning, Tax Free income, Tax Planning