Archives For Financial Planning

Vision vs Trust

August 13, 2017 — Leave a comment

Something is holding you back from achieving at a greater level! Its possible that it is either vision or trust. Vision and Trust aren’t mutually exclusive entities. However, it is helpful to have at least one of them present at all times.

 

vision vs trust 1

Images Credit: Accenture Images / Drive Media

 

Lacking vision or the ability to look beyond current reality can lead to missed opportunities. A great example comes from a story my father often tells about himself….. Now, somewhat laughingly.

Years ago, I believe I was about 4 at the time, my dad was wanting to invest into Real Estate. He mentioned to a poker buddy that he was looking at land and had his eye on a neighborhood lot in Conyers, GA; $16,000. The Poker Buddy, a much older man and very successful, said that he had a lot for sale on Lake Lanier and that he’d sell it to my Dad for a better than normal deal; $9,000.

So, Dad being excited about the opportunity went to take a look at the Lake Lanier lot. As he approached the lot there was an unsightly old bus, rusted out, over grown with weeds located right in the middle of the property. His excitement for the investment quickly waned. All he could see was that bus! All he could think was that he was going to have to do something with that bus! He also laughs about the thought of telling my Mom that he had spent their savings and they now had this bus to deal with. Their future dream spot, next to the bus:)

He ended up choosing the more pristine, more expensive neighborhood lot in Conyers. For those of you not from Atlanta; Conyers is a fine community but has never materialized into its full potential. Some of my childhood memories are of us as a family reluctantly driving down to see our lot and just look at it, in Conyers….. in the middle of this Ranch style community. Dad ultimately sold it for a modest profit.

And now the rest of the story……

There is a good chance that you may have visited that same Lake Lanier Lot. Quite a bit later it sold for several million dollars. It is now the location of the entrance to Lake Lanier Islands. A large lake resort with hotels, conference center, restaurants, marinas and golf course.

A lesson that our family repeats often, Sometimes you have to look past the bus.

 

Vision Seeing Beyond The Bus

Image Credit Drive Media – (Not actual Photo from lot in story)

 

No disrespect to my Dad because he has been successful over the years but not in this particular instance. He didn’t have the vision to see the possibilities. His entire focus was on the bus not the opportunity. In my profession its a common condition that I see often; focusing on the worst case scenario more than the best case scenario.

Trust

It is important to have a team of people around you who are successful. Tony Robbins says that you are the sum of your 5 closest friends. Having a relationship with them as friends or advisors provides you with resources and experience in areas where you may be lacking. Having resources and trusting in them will allow you to have success when there are times of uncertainty. Trust in the wisdom of someone who has gone before you.

Practical Application

Most Americans have a majority of their Net Worth tied up in a retirement account or their home. Most do not have huge investment accounts yet. Either way, they have never seen, first hand, the massive impact that taxes have on an investment. Their IRA/401(k) investments are still being deferred; therefore, the tax problem which exists has yet to be realized.

Over my 20+ years in business I have always stressed to our members the importance of investing into Tax Free Opportunities.
Yet, in the early stages of life it is common for investors to lack the vision of a time when they will have massive accounts. Later in life when accounts are huge; the tax ramifications can also be huge. However, most ignore the Tax Free message since they do not have the experience of it being a major problem (and neither do their friends).

To reference our earlier example the bus in this case represents today’s problems or desires which may be avoiding the tax today on small investments. Thus also lacking the trust and vision to avoid the tax on the massive amounts down the road.

The Intersection of Vision and Trust

A lack of vision and trust is a recipe for never reaching your full potential.

The Encouragement

As you invest have the vision to “look past the bus” towards a time when you could reap millions from your investments.

Trust in your diligent investing and in the knowledge of those ahead of you. Have faith that you will win longterm.

Plan accordingly.

Avoid these 2 common financial mistakes to live a more stress free life.

 

These two common financial mistakes lead to a greater sense of uncertainty and a more stressful life. The Life You Can Afford to Live is designed to provide you with tools to lead the best life possible. So, naturally we wouldn’t want you to miss two of the most common mistakes that we see people make in their financial life.

 

2 Financial Mistakes

 

Most often when someone speaks with authority on a subject its because they’ve had personal experience within the subject matter. Certainly true in this instance. I am bringing you this message from a point of I’ve been there and didn’t enjoy it and didn’t even get a t-shirt. Fortunately, my experience with this was early in my business life therefore the results weren’t catastrophic. However, the stress and tension that resulted taught me valuable lessons.

 

My goal is to provide you with enough information for you to know when to ask for help. We certainly can’t get to specific in this format but you should be able to glean enough that you know whether to raise your hand or not. Our team stresses these points throughout our process so we are well equipped to answer any questions that may surface.

 

The 2 Common Financial Mistakes to Avoid

 

1. Not Creating Contractual Wealth

Contractual Wealth is when someone else has a legal obligation to you. Contractual wealth also means that you have recourse if they do not fulfill their contractual obligation. This type of wealth provides you with a higher level of certainty and predictability. Certainty and predictability provide you with a more stress-free financial life.

Before sharing examples of Contractual Wealth building tools lets look at its counterpart, Statement Wealth. Statement Wealth is the most common form of saving and investing. Likely due to ease or someone lacking in knowledge of alternate investment options. The premise of Statement Wealth is that you save or invest into vehicles in which you have little control over the outcome as well as any recourse should it not have your desired result. Common examples are 401(k)/IRA Plans, Stock Portfolios, Mutual Funds, ETF Investments and Savings Accounts.

Some examples of Contractual Wealth include:

Secured Bonds – Mortgages – Rental Real Estate – Commercial Real Estate – Annuities – Life Insurance – Reverse Mortgages – Private Lending with Collateral – Asset Care Plans – Business Ownership – Grantor Retained Annuities

 

Click here for a quick 2 minute video explanation of Statement Wealth vs Contractual Wealth

 

2.  Not Creating Tax Free Income

Mark Twain once said, “the only certain things in life are death and taxes”. So true, but one thing Twain failed to mention is that Tax Rates are always changing. You certainly can’t ever count on paying the same tax rate. In an effort to reduce or even eliminate the risk of Higher Tax Rates we want everyone to take a more intentional approach towards creating Tax Free Buckets of money. The ease and allure of Tax deferral is great and we want you to have some funds in that environment, but not solely.

 

Particularly Tax Free money helps you to manage how and where you withdraw money from during retirement. Thus, creating the aforementioned predictability and certainty that reduces stress in the Golden Years.

Some examples of Tax Free Investments include:

Real Estate – Municipal Bonds – Life Insurance – Roth IRA – Roth 401(k) – SLIRPS – Some Captive Strategies

 

Hopefully, this will give you the ability to AVOID these two common financial mistakes. I’ll close with a couple of questions.

Have you addressed these two financial mistakes in your own plans?

Would you like help in avoiding these pitfalls?

 

If you have found this article helpful please subscribe to The Life You Can Afford to Live and follow us Facebook, twitter and LinkedIn so that you do not miss any future posts.

5 Questions about life ins TB

 

As we approach Life Insurance Awareness Month in September (Yes, and only financial geeks like me know that September is LI Awareness Month), I thought I would provide some framework for you to re-think or examine your own life insurance plans.

Life Insurance can be confusing. Not to mention the pressure of an agent trying to get you to make a purchase…… any purchase. So, as you consider your own life insurance plan here are 5 questions that you should ask regarding yourself regarding your personal policy. If these questions can’t be answered or aren’t answered satisfactorily then you should consult an experienced financial planner to ensure that your plan is a fit for your family and your personal situation.

 

1) Do I have the right amount of coverage?

 

We believe that each person should have their Full Economic Value in life insurance Death Benefit. The calculation to determine your Economic Value is:

Your Annual Income  X   # of working years remaining   =   Your Economic Value

This may vary as you approach retirement. At retirement point the death benefit should equal your estate size. Other planning caveats are for non-working spouses (all spouses work however all do not receive an outside paycheck for their hard work). In this scenario, consider the cost to hire someone to perform the duties they perform as the appropriate amount.

 

2) Will my insurance expire without value?

 

Some types of coverage like term coverage are designed to end without value regardless of whether the insured is still alive. Other types can lose value and leave a large surprise to the insured when they realize that they have paid in to a plan that is being canceled or needs unexpected additional funding.

 

3) Is my life insurance coordinated with my retirement plan?

 

This one can get tricky. In order to receive the highest amount of retirement income it is wise to create a coordinated retirement and life insurance plan. This coordination will allow for income to be received with the best possible tax treatment without fear of running out of money during retirement. This level of coordination is best designed with your financial planner who is well versed in retirement and insurance planning.

 

4) Does my life insurance have a clause for Disability?

 

Many insurance agents often overlook this feature in their zeal to make a sale. An educated consumer will always want a life insurance plan that protects them from disability. This means that if the insured were to become sick, hurt or unable to work the insurance premiums would be made on their behalf by the insurance company. This isn’t a reason to not own proper disability insurance, but simply helps to make sure that life insurance premiums do not have to cut due to the loss of income or additional expenses of a disability.

 

5) Does my life insurance have living benefits? Specifically benefits like Long Term Care or Chronic Illness benefits.

 

These are features within life insurance policies are newer to the market place and all companies have not adopted them at this point. However, I personally wouldn’t recommend a policy without them in today’s market place. Including these benefits can often times be added with little or no additional premium and potentially save big money down the road.  It is often advisable to choose multiple policies with and without this feature due to how they are treated when/if they are ever utilized for this purpose. This feature can be added to many term or permanent policies.

 

Hopefully these questions have provided the framework for you to begin examining your own life insurance strategy. As you can see life insurance is an integral part of any financial plan. It is advisable to work with a professional to determine the appropriate approach for you and your family. Be careful when talking to an insurance agent who only works for one company or doesn’t specialize in coordinating this with a financial plan. They may be limited by the choices which they can offer.

 

If we can help with this conversation or if you simply want to learn more about Drive Planning connect with us on-line or in person.

Call or Text me at 404-429-4132 or connect on-line with me via Twitter, LinkedIn or Facebook