You should always have cash on hand, but what’s the right amount of money do you need? When do you know if you have too much of it on hand? This week in the No Payne, No Gain podcast, Bob and I will help you find the balance between how much you should have in cash and how much you should invest.
Finding the right balance between the two will allow you to better prepare for your retirement. And in honor of the 92nd Academy Awards, we’re adding a little twist in the way we talk about financial planning. As always, we will also have this week’s financial propaganda.
For our spotlight segment today, we have our colleague, Courtney Dominguez, CFP©. She’s here to break down a retirement plan for one of our clients. Our discussion highlights the importance of having the right strategy for your portfolio.
We have a great show ahead of us, so tune in to the No Payne, No Gain podcast now!
Cold Hard Cash—How Much Should You Have?
Having a healthy amount of money in your bank account is always good. At a certain point, however, it becomes prohibitive to have too much of it. Like most things in life, it’s vital to find the balance between the amount of cash in your savings account and the money you have invested.
02:31 – The old passbook mentality is a detriment to your retirement plan.
03:06 – Even if your money is safe, it is not earning enough interest. You’re losing against the purchasing power of money.
03:42 – The rule of thumb is to have at least six months’ worth of expenses in cash.
04:38 – We’re all taught to diversify; however, people tend to have way too many accounts.
05:02 – The compound and penalty of your money in all your accounts are massive. In the long run, this does not help you achieve your goals.
05:40 – You have more flexibility and liquidity when your money is consolidated.
06:02 – You can boost your income by consolidating and investing properly. This significant cash flow can be enough to help your retirement plans.
Financial Planning in Movies
The 92nd Oscars happened this past Sunday. We thought it’d be a cool idea to take some famous movie quotes and put them into a financial context.
11:09 – “I’ll be back.” —Arnold Schwarzenegger in The Terminator. Everything goes back to the average, so you always need to prepare for a bear market.
12:48 – Don’t prepare right before it happens. Make sure you test your portfolio and have a balanced approach.
14:08 – “Toto, I’ve got a feeling we’re not in Kansas anymore!” —Judy Garland in The Wizard of Oz. Retirement is a big transition, and you will have that income gap because you’re not working anymore.
14:45 – You will go from wealth creation, having a monthly paycheck to living off your portfolio.
16:03 – “You can’t handle the truth!” —Jack Nicholson in A Few Good Men.
16:52 – You don’t know what you own, why you own them, and the fees you’re paying. It can be daunting and not a lot of fun to find the answers to these questions.
17:10 – While you may be in better shape than you think, you need a better strategy to fix what you own.
17:38 – Financial planning should be intuitive and common sense. If you’re having trouble understanding your financial matters, your adviser is not doing a good job.
Financial Propaganda of the Week
Once in a while, Bob and I find brilliant articles with sound financial advice, instead of fear-mongering ones. Here are our great finds this week.
22:02 – Bob found a helpful article this week, entitled “5 Terrible Money Mistakes That’ll Wreck Your Retirement.”
22:30 – The number one mistake most of you make is flying blind.
23:07 – The second is saving less than 15% of your income.
24:41 – Number five is assuming you can work forever.
25:43 – Ryan also found an excellent article about taxes. It shared some pro moves you can make in light of the New SECURE Act.
25:53 – One thing to consider is the frequent changes in the estate tax. Take advantage of that and do some gifting to move money out of your estate.
26:53 – If you’re inclined to charities, be smart about how you give the money. Donate your most appreciated assets and get a charitable deduction.
27:43 – You can also make donations out of your IRA directly after you’re 70 and a half. Instead of paying taxes when it comes out of your retirement account, that money comes off the top of your income, which is another huge advantage.
This week, Dan Irving answers our listeners’ questions about their finances.
33:35 – Question #1: I have saved millions, and we don’t have any kids to pass it on to. Should I just spend as much as I can to make up for the last 10 years of pinching pennies?
36:18 – Question #2: I’ve been approached about buying an insurance policy that would cover all of my cemetery and funeral home costs when I die. Is this a good purchase?
Our special guest for this week’s Spotlight Segment is Courtney Dominguez, CFP©. Courtney breaks down a retirement plan for one of our clients to help them on their path to financial freedom.
44:04 – Courtney gives an overview of the couple’s case: They are not yet thinking of retiring for some years but are worried they may be forced to retire.
44:38 – You can’t work forever, especially since there may be unforeseen circumstances. Ask yourself, “Am I financially independent?”
45:20 – They’ve done a good job on saving; however, their investments are way too aggressive for their current goal.
46:00 – You do not need the risk involved in investing when you’re near the age of retirement. It puts you at risk of not being able to retire.
48:41 – Get out of mutual funds, get into lower-cost options, and increase cash flow.
“You’re probably in better shape than you thought, financially speaking. The bad news is your portfolio is probably not the portfolio you need, and you’re probably sitting on way more risk than you should be.”
To download 5 Ways to Maximize Your Retirement Accounts and Save on Taxes in 2020 and the Highlights from the new SECURE Act, text BULLISH to 555888.
If you have saved over $500,000 for retirement and need a plan based on your retirement goals, Bob and Ryan will create a 360 Financial Portal just for you! Text or call 844-752-6692 to check out the 360 Financial Portal with no strings attached!
Contact us for a consultation with our financial advisors to start a personalized plan
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