What does “financial readiness” mean? Many people say, “Well, that’s having the perfect portfolio.” Some say that you have to outsmart and predict the market. Some say that it’s the ability to be agile enough to adjust when things go wrong in the market. That is what Wall Street is built on and would like you to believe! Myths! It is not academically or fact supported!
In my thought and practice for our clients, financial readiness is having the following components:
Fact-based portfolios that bring better predictability to results:
- Asset allocation has shown consistently to be the significant factor in performance
- Using fact-based studies based on the academics of investing should give us more comfort
Probability of success in retirement:
- Six months of savings in an emergency fund
- The capacity to live on less than 3% of your wealth
- Five years in conservative investments
- No debt
An appropriate estate plan:
- Durable financial powers of attorney
- Medical directives
- Trusts as appropriate
Proper planning for those you love:
- Durable powers of attorney for children over 18
- Medical directives for children
Proper risk management:
- Minimizing the risk of children
- Ownership of assets
- Legal documents
- An umbrella policy
Emergency preparation for home with three weeks of:
- Nonperishable food
If you are going to be financially ready, at a minimum, you need to plan for, adjust and prepare all the above categories so that when the unknown happens, you have greater flexibility, more resilience, and increased capacity to adapt to the unknown disaster, event or life change.
Are You Financially Ready?
Our Vision to Wealth Process® provides you with the readiness to enjoy tomorrow with the knowledge that we have done our best to help you become financially ready based on your goals and desires.