Wealth Sustainability Factors - Maintaining Your Wealth

STAT Newsletter

( 2012\1A)

"Being rich is having money; being wealthy is having time."

-Margaret Bonnano (Author)

Wealth Sustainability Factors

Maintaining Your Wealth

Reaching financial independence (where work is optional), is difficult enough but staying there can be even harder. Our major theme this year is "wealth by intention" which is far different than "wealth by accident". Sometimes clients make big bets that pay off and they think this can be repeated in order to engineer the same outcome. Usually that proves false. Maintaining financial independence requires adherence to a few simple (but seemingly difficult) factors.

Save More / Spend Less - Saving regularly in both retirement plans and outside these plans is usually a common trait found in those maintaining wealth. Saving is the inverse of spending so this comes into play as well. Regardless of the level of income one has, if you spend all of it and save none, by definition you will have a poorer financial future.

Avoid Excess Debt - Leverage can also be deadly to maintaining wealth and it certainly has been for many over the past several years. Leverage magnifies losses and makes modest financial problems full blown disasters. Leverage or debt also decreases flexibility which has proven important in navigating the often rapidly changing waters of personal financial circumstances.

Avoid Big Bets / Diversify - Position size issues or overconcentration can also prove fatal to the goal of keeping wealth intact. This comes into play not just with financial assets but also human capital. That is, the place you earn your living. If all of your financial resources and human capital resources are within the same industry sector that can prove detrimental to your long term goals.

In closing, reaching and maintaining financial independence today is likely a planned outcome. If we "connect the dots" between spending and saving; needs versus wants; short term versus long term, then we have a good chance. It isn't magic but it works. Big bets; excess debt; low/no savings, these will likely ruin the plan.

We are happy to visit with friends, family or colleagues to provide a second opinion on their finances. Our aim is to change the way people think about money.

- James E. Wilson, CFP®

A Call To Action:

In two weeks, we will consider, "Do You Believe?" - a summary of our approach to Personal Financial Planning and what we believe.

__________________________________________________________

We were founded to provide a vastly different approach to wealth management than the traditional financial services industry firm, one where advice is unbiased and holistic, not transaction based and transitory. We believe we have a directive to serve, not sell. That is our inspiration, our passion.