Wealth Planning: Curate Your Life
Foundation for Long-term Wealth Building
Maintain appropriate insurance for health, life, disability, long term care, and umbrella.
Maintain 6 to 12 months emergency cash.
Reduce or eliminate “bad debt” (i.e. high interest).
Maximize contributions to tax deferred plans; do not miss out on employer match.
Consider building liquid reserves, taxable investments, paying off primary home lien; stronger financials help pursue opportunities or mitigate potential crisis. Avoid over-leveraging.
If retired, minimize withdrawals to less than 5% of portfolio subject to RMDs.
Review account beneficiaries and consult CPA and attorney for taxes and estate planning. Maintain master list of assets, insurance and professionals for your heirs.
Direct Nuggets – Build career income and diversify across assets or income sources to build passive income. Focus on cash flow in your endeavors. Do not be afraid of modest equity exposure; it’s your main tool to fight inflation and grow capital over long-term. Annually reallocate to your strategic asset allocation – use risk indicator below as a starting point. Expect anything but a straight line; the only free lunch on wall street is time so invest early and invest often!
Indirect Nuggets – Maintain physical and mental health. Due to the great baby boomer wealth transfer, clients are turning to their advisors for financial harmonization among their families.
Retirement, Tax & Legacy Planning
We’ve provided general information on retirement plans, retirement income planning, net worth simulation of globally held assets, impact from RMDs and latest SECURE act, social security and pension optimization, qualified charitable distribution, charitable giving strategies, 529 and insurance as estate and credit protection, buy-sell insurance, liquidity events, and many more needs.
Do you know if your account beneficiary designations are “per capita” or “per stirpes”? Formal drafting of documents is coordinated through external tax and legal advisors as needed.
MangoTree® Risk Indicator
(move slider so each box has desired value)
Are you on track? Vanguard’s Retirement Income Calculator
Will it last? Vanguard’s Retirement Nest Egg Calculator
Personalized analysis is available for clients.
The above risk indicator is hypothetical and for educational purpose and not an investment recommendation. It should not be used as a primary source of your investment decision. Select your asset allocation carefully after weighing in all pros and cons. It is not a personal financial advice and consult with a financial advisor prior to portfolio implementation. The calculation methodology is subject to change.
This MTC risk indicator is an estimate based on a balance of your macro goals and risk preferences. It has a range of 0 to 100% and can be interpreted as the amount of “risk” or market exposure or equity level. It corresponds to the following asset allocations: Stable (cash equivalent) 0% | Conservative 20 – 40% | Moderate 40 – 60% | Aggressive 70 – 90% | Aggressive All Equity 100%.
Close to zero value of indicator means you should not be investing in the market even at the expense of loss of purchasing power long-term – you may want to consider insured products through our affiliate, MangoTree Benefits, LLC. A reading of 60 or above is considered aggressive.
Role of Risk Indicator
Traditional investing approach of “appropriate” asset allocation is subjective. The “appropriate” asset allocation is meant to deliver maximum returns for a tolerable level of volatility over a given period of time. Hence the “appropriate” asset allocation only becomes obvious in hindsight since no two market corrections or investor experiences are alike. Even when we can’t guess the future, we feel we should. So investors are left to decide on an asset allocation based on their experience and future outlook. It is common that investors’ tolerance for risk rises with rising market and vice versa. To neutralize this effect, one could start with their age as a starting point (i.e. forty year old can begin with 60% equity and 40% fixed income). To further refine, you would then add or subtract to equity or fixed income based on above factors. From a long-term planning standpoint, savings and asset allocation have a far greater impact on nest egg than security selection.
This indicator is effective for long-term investing using core, strategic allocation, i.e. periods that span full peak to peak market cycles. The indicator is less meaningful for tactical, satellite or alternative strategies unless such strategies use continuous level of risk.
Key note about risk tolerance, if you want to bail out after only a moderate dip, you probably shouldn’t be investing in the first place. Even conservative goal of wealth preservation requires some risk where an effective wealth preservation solution seeks to preserve the purchasing power of wealth long-term like in the case of many large endowment and pension funds.