Safe Harbor Financial: Liquidity

The folks from Safe Harbor Financial stopped by Studio10 with some important information on how much liquidity is needed in retirement. 

Below is a look at some of the questions and answers discussed on Studio10.

1.  How much liquidity do you need in retirement?
Financial media tells you that you need liquidity during retirement, so this mistake isn’t your fault at all.

There are three features in all investments that you need to consider:
•    Safety if Principle
•    Growth Potential
•    Liquidity (the ability to access all of your money with little to no penalties)
    
But know this… “There is no such thing as a free lunch” and “what sounds too good to be true usually is.” What does this mean?  Well, it means that every investment option out there gives you two of the options at the sacrifice of the third. You must recognize that you have a trade-off.

For example, a mutual fund is liquid and has growth potential but how     much     safety from market loss does it provide?  None.

On the other hand, a bank CD provides safety from market loss and is liquid even though there is a minor penalty to liquidate it.  But it is liquid non-the less.  However, a CD has very little growth potential. So, there is a trade off…
    
2.  Which feature should a retire give up?
Media says you need liquidity but you also know you need safety from market losses. So, does that mean you have to give up growth potential?

Let’s look at liquidity and why you would need it.  Ask yourself, how much of your portfolio value do you need to access at any single point in time and what would do you need it for?

If you’re like most retirees, you want income.  Typically it is 5% per year.  You may like the idea of protecting your principle and living off the earnings your portfolio generates.  But you may want more than your regular income and may want to purchase something sizable like a new car or another home.

How about children? Some of you may want to help out your children with their business ventures or support them during a financial crisis. It could also be to help with college funding for grandchildren.

What about healthcare? Unexpected healthcare costs generally increase as people get older.  This has been the #1 need for liquidity in retirement.

3.  Is there an easy way to make this decision?
Well, if you think about your core nest egg, typically, the only liquidity needed is the last one on the list, unexpected health care costs. Once you recognize this, you can sacrifice liquidity to some degree so you can enjoy safety of your principal and more growth potential than you otherwise would have realized.

For a free comprehensive personal review of your financial portfolio or to make an appointment with Jim, email Jim at jbyrd@safeharfin.com or call 1-251-625-1226 or toll free at 1-877-251-1984.

Find out how to get a free copy of his DVD or book, The Ultimate Success Secret, email Jim at jbyrd@safeharfin.com or call 1-877-251-1984.

Safe Harbor Financial Services
9056 Merritt Lane
Daphne, AL 36526
Call Toll Free: 866-251-1984 or local 251-625-1226
www.safeharfin.com