Today’s Prep:
Do you know the three worlds of money? Where does the bulk of your money live? Is your money appropriately balanced across all three worlds? We’ll break it all down on this episode.
Equipping Points:
When it comes down to it, there are three worlds you can put your money in. We’ll be going over all three: the world of banking, the world of insurance, and the world of Wall Street. Which one is better? Why are they all important?
Early on, when you have your first job, you typically open a bank account and save part of your paycheck there. Banking is good for liquidity. The problem is, the bank doesn’t have to pay you anything. People keep a lot of money in the bank because it’s liquid and therefore feels safe. But what other accounts can be considered liquid? Should you keep your money in a place where you can get a better return?
Outside of car insurance and health insurance, the insurance world brings life insurance and annuities. What opportunities can these products provide? If you’re over 50, you especially need to look into how you can put money into this world. Finding the way it fits into your plan will give you some growth plus protection.
Investments, like stocks, bonds, and mutual funds, live in the Wall Street world. The values will change every day, and you will always pay a fee. Some fees will be disclosed and some undisclosed. You have growth potential and liquidity, but you don’t have safety in this world.
You need liquidity, growth, and safety throughout your financial plan, which is why you need your money in all three worlds. Does your plan span the worlds of banking, insurance, and Wall Street?
Listen to the entire episode or click on the timestamps below to skip ahead to a particular money world.
1:05 – What are the three worlds of money?
2:14 – The banking world offers liquidity.
5:03 – The insurance world offers life insurance and annuities.
8:40 – The Wall Street world holds investments.
Today’s Takeaway:
“Liquidity, growth, and safety–you can only get two of those three, no matter which world you’re in. You need all three, which is why you need products in all three of the worlds.“
-Eric Peterson
Related Resources:
What Is Your Retirement Mindset?
Subscribe To The Podcast:
Apple Podcasts - Google Podcasts - Spotify - Stitcher - iHeartRadio - TuneIn
Check out some other recent episodes
Mailbag: Should I Fire My Broker?
Navigating life’s financial crossroads can be tricky, especially when it involves your financial future. In this episode of Retirement Ready, Eric addresses these complex issues head-on. How do you best evaluate your broker and your investment performance against the S&P 500? Eric says a lot of that comes down to setting expectations and understanding the risks. Then, Holly wants to know what to consider before making a midlife career change.
Read More
Putting It Off
We are all guilty of procrastinating from time to time. Financially speaking, though, this can get you into a lot of trouble. Let’s talk about the areas where it might feel better to kick the can down the road.
Read More
Common Scams to Avoid
Americans over 60 have lost more than $3.1 billion in various forms of fraud and scams in the last 12 months! Today we talk through some of the common scams people unfortunately fall for and how you can stay vigilant against it.
Read More
Financial Strategies: Agree or Disagree?
There are a number of financial ideas that people have differing opinions on. Eric shares today which of these he agrees with or disagrees and why.
Read More
Divorce Mistakes
Unfortunately, divorce happens. When it does, no one wants to make costly financial mistakes amidst an already stressful time. Today, we talk about the mistakes that can happen and how to avoid them when it comes to dividing up your assets with a spouse.
Read More
Villains of the Financial World
Just like some of these cinematic villains, some of these financial elements may have a bit of nuance and history that can make it hard to label them all good or all bad.
Read More
Uses for Life Insurance
When you’re younger, life insurance is often thought of as an income replacement as needed. But as you get older and into retirement, you might find other uses for life insurance. When thinking ahead for your estate and how it passes to beneficiaries, life insurance can prove to be a useful tool. Currently, the proceeds from life insurance are tax-free. How does that change how you include it in your financial plan? Eric outlines some of the options and benefits life insurance can provide.
Read More
Understanding Financial Risk
What kind of risks do you take in your financial life? As you get less comfortable with things like climbing up ladders and riding on skateboards, you might also become less financially risky. When you enter retirement, how you view your money in the market changes significantly from your working years. It’s important to look at your portfolio to ensure your investments match your risk tolerance.
Read More
Mailbag: What Financial Advice Should I Share with My Grandchild?
Why is retirement planning different than the “good old days” that our parents and grandparents experienced? Things like pensions, Social Security, and even RMD age have changed. Is your financial plan set up accordingly or is it in need of some changes to match?
Read More
The Good Old Days
Why is retirement planning different than the “good old days” that our parents and grandparents experienced? Things like pensions, Social Security, and even RMD age have changed. Is your financial plan set up accordingly or is it in need of some changes to match?
Read More