What are the three qualities of money that everyone wants? How can you get all of them within your portfolio? Phil talks through the key three qualities and what you need to make it happen.
Click the timestamps below to jump ahead in the episode…
Other Retirement Facts:
Our topic today focuses on the three qualities of money: growth, safety, and liquidity. Phil jokes, you get to pick two. Everyone wants these qualities, but if you can’t get all three at once, how do you build a portfolio that provides you with what you need?
Most people have cash, which provides safety and liquidity. But you aren’t going to get growth with cash sitting in the bank. This is often your emergency fund. Don’t expect to make money off of this fund though.
What about the market? From stocks to bonds, the market will give you potential growth and a relatively quick possibility for liquidity, usually within a few days. Is it safe? There’s no guarantee of your principal. Blending the portfolio helps, but you will have losses. Are you willing to take some risk to gain?
Annuities are a popular topic these days, what do they provide? Generally speaking, you’ll give up liquidity and even some growth, but you will have safety. Do you understand what your annuity or potential annuity does? How does it fit with the rest of your plan?
Are you considering real estate as a piece of your portfolio? What are the pros and cons? There’s growth potential there and even some safety since it is a physical asset. But if you need liquidity, you can’t get out quick. You’ll be bound a bit by the housing market as well.
Do people tend to put too much money in one category, be it safety, growth, or liquidity? Depending on how close you are to retirement, you may lean one way or another. Are you keeping inflation in mind? What is Phil’s approach with clients when building in all three into a plan?
Listen to the entire episode or use the timestamps below to skip to a particular segment.
0:35 – Why are so many people interested in getting a camper?
3:46 – What are the qualities of money?
5:10 – What are the qualities of cash?
6:19 – What qualities does the market provide?
7:44 – What do you get from an annuity?
9:44 – Is real estate worthwhile to have?
13:50 – Do people put too much of their money in one area?
Thanks for listening! We’ll be back with another episode next week.
A Quotable Moment:
“You’re probably planning, hopefully, for a 20-30 year retirement. So, you can’t just have safety because inflation’s going to happen. Money in the bank is never going to keep up with inflation.”