Additional risks to your money- You may not be aware of
There are five risks potentially more devastating than risk to your money. Losing money can take on a lot of different forms. You can lose money over a long period of time if you don’t properly plan your retirement or plan your expenses. You’ve got to have a plan for whatever you do.
- Inflation is that hidden cost that eats away from our purchasing power of our money over our lifetime. It doesn’t just affect us when we retire, but all the time. Milk and Bread are cheaper today then they will be in five years. The average inflation rate each year since 1951 is 3.42%1.
- Interest. I have clients ask me about the interest all the time. ‘What’s the interest that I’m going to gain?’ If you have 6% interest, and 4% inflation you’re actually making 2%.
- Tax liability on the interest earnings. You may be earning a little or even losing money, depending on your situation.
- Lack of diversification. Don’t keep all of your eggs in one basket. That applies to both ends of the segment of the economy. If the economy is in turmoil don’t put everything in cash. When cash is in turmoil don’t put everything the other direction. Stay diversified, have different asset classes, things that offset each other while the economy is doing its thing. None of us control what’s going on worldwide, or even in the U.S. Keep a portfolio that’s going to be well-rounded, keep plenty of cash on hand, but also keep some long-term money, medium-range money, and short-term money.
- People are living longer, and we’ve got to understand the effect that that’s going to have. When we talk about retirement planning, we talk about creating sustainable income for 20 to 30 years. It took me 30 years to grow up, took me 30 years to work, and now I’ve got 30 years to retire. At retirement you may want to play or revert back to your childhood. You will need to be able to fund those habits.
- And the last one is Social Security, and the amount of that Social Security dictating what their retirement lifestyle is going to be. I think we need to all kind of wake up and decide that maybe the Social Security check that we’re going to get is about a third of what we need. The other two thirds of our retirement are going to have to come from us and our savings.
Plan to get there. How will you combat inflation and control your tax liabilities?
If you need help on your situation, give our office a call at 417-882-1800.
We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions.
We are not permitted to offer, and no statement contained herein shall constitute, tax or legal advice. Individuals are encouraged to consult with a qualified professional before making any decisions about their personal situation. Our firm is not affiliated with the U. S. government or any governmental agency. Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and The Resource Center are not affiliated companies. AW02181926