A good financial plan should result in clarity & confidence about the next steps within your financial game plan. So, I want to share some thoughts about the essentials & questions surrounding each.
MARGIN
Let’s start here: (i – e > 0) Income minus Expenses must be greater than Zero.
If not, nothing else matters from a financial planning standpoint.
LIQUIDITY
☐ Emergency Funds (Checking, Savings, Money Market)
☐ Taxable Brokerage Account
☐ Lines of Credit (Home Equity, Securities Based, Personal)
☐ Debt management.
Note: Not all debt is bad, but there is a strategy to it.
PROSERVE
☐ Estate Planning Documents
☐ Appropriate amounts of life insurance, disability insurance, long-term care insurance, etc…
☐ Health Savings Account (if applicable)
ACCUMULATE
☐ How much do we invest each month: What investments, which accounts, and why?
☐ How much do I need to be financially independent?
☐ Taxable Brokerage (Platinum: $1,000,000; Gold: $500,000; Silver: $250,000; Bronze: $100,000)—but by what age?
☐ Retirement Accounts (The match might be good enough until you have $100,000 in a taxable brokerage account, then ratchet up from there)
☐ Goal specific situation (ex: paying for a child’s education in 15 years)
☐ [Important] All of the above utilizing low-cost diversified portfolios
DISTRIBUTION (Income)
☐ How much can I safely withdraw without running out of money?
☐ Which accounts will we draw income from?
☐ How do we minimize taxes & maximize what we keep?
☐ GOAL: maximize legacy or maximize my lifetime income (or somewhere in-between)
CLOSING THOUGHTS
For those familiar with football, consider this analogy: A financial plan is our overall gameplan, however once we’re in the game, things (life) happens, and as it does, we have a handful of different plays to consider—mini game plans within the overall plan.
A great financial plan is always changing, modifying, and considering how to integrate all these elements and mesh them together to optimize your specific plan.
If you or someone you’re close to is a high-achieving professional that could use help aligning their finances and establishing a financial plan, please reach out to us, we’re accepting new clients and eager to help.
–Nic
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Investing involves risk including the potential loss of principal. Independent Advisor Alliance and LPL Financial do not provide legal advice or tax services. Please consult your legal advisor or tax advisor regarding your specific situation.
