Understanding the Three Worlds of Money

A major hurdle to getting started with saving and investing is trying to figure out exactly where to begin. With so much information and so many products available, trying to narrow things down can feel a bit overwhelming.

A major hurdle to getting started with saving and investing is trying to figure out exactly where to begin. With so much information and so many products available, trying to narrow things down can feel a bit overwhelming.

But it doesn’t have to be.

The simplest way to think about your money and how it can be used is to break it down into three different worlds: banking, insurance, and Wall Street. Almost everything you can do from a saving and investment standpoint can fall into one of these three worlds, and once you look at things with that in mind, it starts to get a little simpler to navigate.

Let’s talk a little about each of these worlds and how they are used to build a balanced portfolio for our clients.

We’ll start with banking, which is exactly what it seems. These are your safest investments like savings accounts and CDs. Putting your money here means you won’t have much worry about your account balance but it also limits your opportunities for growth because current returns are very low.

The next world is insurance, which covers many of the products you use to protect yourself and your family. The goal here is to take away risk and this world is designed to help you do just that. While this can benefit you tremendously, it also sometimes means a loss of liquidity for your portfolio. Are you okay with the tradeoff?

Finally, we have the Wall Street world. Many of your investments fall into this area and this has been the preferred path for generating growth on your money for a long time. The long-term results in the Wall Street world are quite positive, but are you going to be comfortable with all of ups and downs of the market?

As you learn more about the three worlds of money and how you can leverage each to build a successful retirement plan, remember that you’re always trying to strike the right balance with every decision you make. If you aren’t sure how to deploy your money, talk to an advisor and lean on their expertise and experience.

Share This Post

More To Explore

Ep 176: Back to the Basics – Retirement Saving Fundamentals

Are you aware that not all retirement accounts are created equal? In this episode, we’ll delve into the different types of retirement accounts, including 401(k)s, IRAs, Roths, and several other examples. We’ll help you weigh the pros and cons of each and give you insights into the purposes they serve so that you can choose the best account for you.

Ep 175: Moving Your Retirement Goalpost – Is It Worth The Risk?

Do you ever feel like your retirement planning goals are always moving? You’re not alone. We’ve found that people often move the goalposts in their own retirement planning, often to their detriment. In this episode, we’re diving deep into the psychology of retirement planning and the dangers of moving the goalposts.

Ep 174: Lessons Learned from the Silicon Valley Bank Collapse

The Silicon Valley Bank situation has gotten all of the financial headlines over the past week, and rightfully so. The event immediately triggered worries that another 2008 event might happen again, but is that concern justified? In this episode, we’ll explain why this run on SVB happened, what it really means, and what lessons we can learn from this.

Ep 173: The Incomplete Financial Plan

Are you confident that your financial plan is complete? Many people believe they have a solid plan in place, only to realize later that they’ve missed important areas. From not accounting for long-term care expenses to overlooking the impact of taxes on retirement income, there are many ways a financial plan can be incomplete.