A collection of resources that provides Financial Planning Best-Practices to knowledgeable and qualified individuals
Introductory Thoughts
This resource is for adults that wish to review of their financial plans. It is comprised of the best overall planning techniques for several phases of adult life. In early adulthood it is about saving for big ticket items like cars, homes, kids and retirement.
For teaching financial literacy to children please see How to Work Financial Literacy into Your Parenting
Basic Principle #1 is to “Create Income from Investment Assets”
To Carry-Out Principle #1 you must:
- Transition from Creating Income from a Job to Creating Income from Investment Assets
- Thoughtfully Transition by Becoming Financially Literate and Knowing the Difference Between an Asset and a Liability
- Manage Your Expenses so that your Funds Can Also Flow into Buying Assets
- Learn to Run Your Own “Asset Management” Business, and then finally
- Take Advantage of Taxes and Utilize the Power of Being a Corporation
- Rules of Thumb for a Successful Financial Life
The Purpose of “Create Income from Investment Assets” is to convince you to put 10% of gross salary into building assets for retirement
Basic Principle #2 is to “Allocate Investment Assets into Buckets”
To Carry-Out Principle #2 you must wisely pick which Investments are right for you. These change over your working life and retirement. To pick the right investments you must understand and implement the following concepts:
- Bucket Investing
- Bucket #1 Investments – A Safe and Secure Financial Base for (a) Working Life Emergencies and (b) the First Years of Retirement Income.
- Bucket #2 Investments – A Low Risk Financial Building Block for (a) the Big Expenses During Your Working Life (car, education, home down payment) and (b) the Middle Years of Retirement Income
- Bucket #3 Investments – A More Risky, but Higher Growth, Long Term Financial Engine for Replenishing Buckets #1 & #2, and Passing Wealth onto Heirs
The Purpose of “Allocate Investment Assets into Buckets” is to convince you that a Bucket Model can be used to effectively manage your assets during employment and retirement and to show you which kinds of investments belong in each Bucket
Basic Principle #3 is to “Invest in and Reallocate Investment Assets Consistent with Key Financial Growth & Risk Factors”
Life comes and goes in cycles. Each Financial Cycle presents opportunities for growth and threats of losing money. Knowing how to reallocate your investments from one type to another (according to the financial cycles) increases the amount of money you acquire and retain for your use. To do this you must:
- Understand the Difference Between “Investing” versus “Trading”
- Understand the Key Factors that Affect a Financial Asset’s Risk Adjusted Growth
- Utilize “Investing” Guidelines to Maximize Your Financial Portfolio’s Risk Adjusted Growth by Reallocating Investments at the Right Times
- Investing Guideline #1: Asset Allocation and Reallocation/Rebalancing Should Be Done Consistent with a Country’s Wealth & Power Position
- Investing Guideline #2: Asset Allocation and Reallocation/Rebalancing Should be Done Consistent with the Four Turnings, Long Term Debt, SocioEconomic, and Population Cycles
- Investing Guideline #3: Asset Allocation and Reallocation/Rebalancing Should be Done Consistent with a Country’s Inflation and Economic Activity Indicators
- Techniques for Rebalancing Bucket #1
- Techniques for Rebalancing Bucket #2
- Techniques for Rebalancing Bucket #3
The Purpose of “Reallocate Investment Assets” is to show you when to reallocate kinds of assets between/within each Bucket and to show you which geography to hold assets in
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