Your Financial Future: Well-Coordinated Financial Planning is Key to Reaching Your Financial Goals | Gary Boatman

During today’s troubling financial times, many investors are wondering what to do to protect their families.

The best solution is to have a written financial plan that creates a blueprint or map to guide your financial future. There must be coordination between investments, taxes, social security, inheritance planning, and all other elements of a comprehensive financial plan.

You should consider each individual part as part of an entire symphony and not just a group of red soloists going in different directions. This is how a masterpiece is created. All good orchestras have a good, skilled conductor to facilitate the outcome.

This week we’ll be discussing investments, but remember that you can’t look at them in a vacuum without considering how they fit into the overall plan. There are three elements to every investment; liquidity, return and risk. The best investment would be something like a guaranteed return of 20%, guaranteed by the FDIC, and you could withdraw any amount of funds needed tomorrow.

Unfortunately, such a product does not exist in the real world.

In fact, there is no product where you can get all three elements of an investment in one. The stock market has always produced the best returns. If you have a brokerage account, you can sell part of your investment and have the funds available within a week, so it is very liquid. You can never be sure how much of your money is available due to market fluctuations, so there is a lot of risk involved.

If there is no good time for a stock market correction, there is a worse time. It is just before or at the beginning of the retreat, when the sequence of risks can destroy the retreat. We will discuss this further in a future column.

Too many investors are underestimating the risk due to the current bull market we have been experiencing since 2009. Corrections are a part of stock market investing and most corrections are not three month like March 2020. The Lost Decade United States dates back only 20 years. . If you invested in the SP 500, it took 12 years to recoup your investment – if you didn’t withdraw any money during that time. While that seems long, it’s pretty short considering that the Japanese Nikkei 225 suffered major losses over 30 years ago and still hasn’t fully recovered.

Those concerned about market risk should consider other investment opportunities.

Banks are currently not the answer for long-term investments due to the low interest rate environment. This is where you keep emergency money and money needed for short-term purchases. Having too much money in the banks is a good way to safely lose money in today’s high inflation world. I know it’s an oxymoron, but it’s true because of the loss of purchase value.

Financial products are an area of ​​the economy where you don’t often see things on sale. Sometimes you will hear about a high bonus for a limited time. It’s probably not the best way for your family to manage their financial life. You don’t need a hodgepodge of unconnected financial products. You need a coordinated financial plan created by a financial specialist who will create a comprehensive plan covering all elements.

If you see someone emphasizing a big bonus, maybe 30% or more, know that it’s probably not real money. No company can instantly turn $100,000 into $130,000. They couldn’t stay in business if they did. That extra $30,000 is in a special account that you can’t get in a lump sum or withdraw from and that can take up to 10 years to lock into your income account. When it is reported that you get 50% more than certain indices, severe restrictions must apply.

Access to money through 10% free withdrawals comes from your real money account and not from the income account, but it reduces this secondary account proportionally, so you may not see any bonuses on This money.

All companies face the same structural issues such as low government bond rates, internal costs and other issues.

This means that if a company emphasizes one area to get your attention, it has less flexibility in other areas. That doesn’t mean there might not be uses for these types of products, but they should be part of a holistic plan that requires multiple meetings to access the best results for your family.

This plan should be created specifically for your family by a full-time trustee who is bound to look out for your family’s best interests and not by a product salesman who is running six seminars over the next two weeks and doesn’t have the time. to meet your family for something other than to sell a product.

Sometimes buying something in a hurry isn’t the best solution for your family.

Your Financial Future is authored by Certified Financial Planner Gary W. Boatman, MBA and CFP, who also wrote the book Your Financial Compass: Safe Passage Through The Turbulent Waters of Taxes, Income Planning and Market Volatility. If there is an area you would like to see covered in the column, send your suggestions to [email protected]