ABC Planning Process
Yellow Money

Yellow Money

Advantages:

High Liquidity

Disadvantages:

Gains or Lower Returns

Examples:

Bank Accounts, CD's,
Cash Accounts

Green Money

Green Money

Advantages:

Protection

Disadvantages:

Gains or Lower Returns

Examples:

Bank Accounts, CD's,
Cash Accounts

Red Money

Red Money

Advantages:

Returns

Disadvantages:

Overall Risk, Loss of Principal

Examples:

Variable Annuities, Stocks, Bonds,
Mutual Funds, 401(K)s, Brokerage Accounts

There are Three Green Money Rules:

  • The principle is protected from loss.
  • The previous year’s gains are retained as interest.
  • You can guarantee an income for life.

The best fit or asset for this column that achieves all three Green Money Rules are Fixed Indexed Annuities. Let’s see how a basic indexed annuity works.


ABC’s In 10 Years

How does The Financial ABC's of Retirement Planning strategy perform if we did the last ten years all over again?

  • No one can predict the future results of the market.
  • We know that historically the market does two things very well…it goes up and it goes down.
  • We don’t know when or how much increase/decrease the future will bring, but we do know that we will experience them at some point.
  • The closer you are to retirement the more difficult it is to “ride out” the bad years.

It is critical to understand this and make sure that your portfolio is set up for your future, you do not want to get caught in a position of doing the same thing over and over expecting different results.

Let's pretend every asset you have is liquid, moveable, and changeable. Next, ask yourself, if you could make a new plan starting today, what would it look like? That includes your CD’s, money markets, annuities, stocks, bonds, mutual funds, REIT’s, or whatever. So let's distinguish between your “investable” assets vs. assets that are not. (i.e. Rental Property or Real Estate)

You will have to imagine your assets not where they are invested today, or last year, or even where they were 10 years ago. We’re not looking in the rear-view mirror, but trying to map out our future.

It is critical that you look at this in that way. You want to have your investments set up for your needs going forward, not left in accounts that might jeopardize your future. Now not all of your assets are going to be able to be re-positioned, however this exercise will give you a glimpse of what you value in the types of assets in which you might invest and how to allocate.