A Few Examples: The Impact of Making Independent Financial Decisions.
Credit Cards for Unplanned Life Events
If you use credit cards for an unplanned life event it may be a simple and convenient decision in and of itself but what people don’t often think about is how it impacts other potentially more important areas of your financial well being. In this case, your savings rate may take a hit which over time can have a huge impact on building wealth. This also puts a lot of pressure on reaching your outcomes with less money going to fund your retirement capital. It also pushes people to pursue higher rates of return in their investment portfolio to somehow compensate for lack of capital contributions to their retirement fund. As you can see, this one decision has a huge influence on the rest of your wealth and your financial confidence.
Buy Term and Invest The Difference
Many people and advisors subscribe to the “buy term and invest the difference” strategy. It has merit to the degree that it provides temporary life insurance and frees up more cash flow to contribute to future capital. What it fails to address is “why wouldn’t you need life insurance in retirement.” Insurance in retirement can provide two sources of capital whenever you need them. It’s more than protection, it’s capital. So it changes the paradigm of why “buy term and invest the difference”. When you’re insured you have the option to spend down your capital because you have a replacement for it. It allows you to significantly increase your actual capital and creates a new capital base should you need it. This alternate paradigm provides the ability to maximize income (spend down of investments) with the life insurance (additional capital) refilling the investments for your family. It’s a bigger decision then, “I can contribute more to my retirement fund right now” equation.
Your Financial Reality is that you might not have the right perspective to make the best decisions on all areas of your financial life. Traditional planning gets you to yes more quickly and to do so only considers a few simple variables at a time. We consider everything all the time.
At Bennett Financial we start with introducing you to a new paradigm. It’s the foundation for achieving better outcomes for you and your family.