Making Your Dreams Come True
By Bob Payne, Managing Director and Chief Investment Officer (CIO)
I created an investment strategy in the early 1980s called the A-to-B Wealth Management Process. The reason is because I had become so frustrated with how people let fear and greed drive their investment decisions, and I couldn’t find a device to keep them invested. If the market went down, they’d sell their stocks. If interest rates went up, they’d sell their bonds. Then we’d have to go back and start from square one.
So the original idea was to create a mechanism that helped people understand why being an investor and not a trader would make the most sense for their financial success. But it actually turned out to be a great life-planning tool as well. Many of my clients say it’s absolutely the best. That’s what A-to-B means to them. But what should it mean to you?
Point A is who you are financially. What do you have in investable assets? What’s in your brokerage, retirement, and savings accounts? What are you entitled to in terms of a pension or social security benefits? It’s also how much money you’re saving or how much you could possibly save.
Point B is your dreams, goals, and values. Unfortunately, it can be very difficult to make projections in our heads, or even with a calculator, because we have to compound against inflation, that insidious hidden tax we don’t always consider. So you need software to make the projections for you. And the distance between point A and point B is how much time you have to achieve those goals.
Somebody who retired last month and is 65 years old probably has about 20-30 years left in retirement to live off his or her assets. If I were you, I wouldn’t go to bed worrying about the ramifications of that. I’d go to bed secure with a foundation of knowledge. That means having a fiduciary or advisor run a wealth projection showing the probability of you getting from point A to point B, net of inflation and taxation. Then keep running that projection every year for the rest of your life, and the chances are very good you’ll sleep like a baby.
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