INTEREST EARNING Assets consist of two broad asset classes (cash and bonds) and serve the purpose of capital Preservation. We want to make sure that the clients have adequate cash flow, regardless of what happen in the financial market and in their lives in order to maintain their standard of living for a given period of time. In the early stages of Financial Life Cycle, we have clients accumulate enough in this asset category to provide six to twelve months of liquidity, before making long term investments. In later stages of life, our formulas are structured to provide a sure cash flow for ten, twelve or even fifteen years. The appropriate attention to Capital Preservation in each stage gives clients peace of mind. To assure maximum tax efficiency, we recommend using primarily retirement assets to fund this category, except for the amount needed for day to day liquidity.
REAL ESTATE This is divided into three categories: Personal Residence, Productive (including Real Estate Trust and rental property) and low Productive (such as vacant land, second homes and passive limited partnerships) The unique functions of real estate include personal use and enjoyment, and the opportunity to leverage by mortgaging the property. Positive financial leverage through a home mortgage provides us with the most advantageous after tax investment vehicle in the world. This is why we place so much emphasis on the asset category relative to what most investment managers recommend.
EQUITIES This includes four groups: domestic mutual funds, individual stock holdings (segregated because of the higher volatility with little diversification) and stock option form an employer. Equities are the growth engine, but subject to the most volatility. Most standard asset allocation approaches ignore the reality that company stock plans are the driving force (requiring careful tax management) in the portfolios of many employees and that “recreational investment” in stock carries a different risk component because there is not enough money to adequately diversify. We try to concentrate on unqualified pension asset in index funds to take advantage of the favorable capital gains rate, and concentrate some of the retirement funds in the area where active money management has shown good result: small cap and emerging market funds.
As time goes by your financial situation changes, you will periodically reassess your asset mix. We revisit a client’s investment policy statement every year. Just as your life insurance changes, so may your financial investments as you periodically reallocate, Rand investments.
By: Hubert Brown
About the Author:
REAL ESTATE This is divided into three categories: Personal Residence, Productive (including Real Estate Trust and rental property) and low Productive (such as vacant land, second homes and passive limited partnerships) The unique functions of real estate include personal use and enjoyment, and the opportunity to leverage by mortgaging the property. Positive financial leverage through a home mortgage provides us with the most advantageous after tax investment vehicle in the world. This is why we place so much emphasis on the asset category relative to what most investment managers recommend.
EQUITIES This includes four groups: domestic mutual funds, individual stock holdings (segregated because of the higher volatility with little diversification) and stock option form an employer. Equities are the growth engine, but subject to the most volatility. Most standard asset allocation approaches ignore the reality that company stock plans are the driving force (requiring careful tax management) in the portfolios of many employees and that “recreational investment” in stock carries a different risk component because there is not enough money to adequately diversify. We try to concentrate on unqualified pension asset in index funds to take advantage of the favorable capital gains rate, and concentrate some of the retirement funds in the area where active money management has shown good result: small cap and emerging market funds.
As time goes by your financial situation changes, you will periodically reassess your asset mix. We revisit a client’s investment policy statement every year. Just as your life insurance changes, so may your financial investments as you periodically reallocate, Rand investments.
By: Hubert Brown
About the Author:
Unbiased financial information provided: by Hubert Brown. He is a commercial Mortgage consultant for several years and is the CEO of HB. commercial consulting Inc
http://www.Bestaffiliatestore.com – http://www.myeverydaymoney.com
hubertbrown@gmail.com 813-382-6659