5 Keys to a Successful Retirement: Understanding and Investment's Purpose
There is a time and place for high risk, high reward savings. But a real plan should include some of these other strategies as well.
right. Welcome back to our Siri's. The five keys to a successful retirement. I'm Chuck Keeton with coach Pete Dorota. He is America's financial coach. He's your retirement specialist and, you know, in the last segment we talked about shifting our retirement perspectives. Coach. Let's see now how we can maybe understand our investment purposes, because when they sit down a perspective client with you, they need to understand what they're doing in their investments to have a true, successful retirement. Chuck. A lot of times it's easy to talk in colors red, green, yellow so red we'll talk about red now. In the first part of this series, we talked about shifting your focus away from trying to accumulate all the time and trying to get that maximum growth. And unfortunately, there's a There's two sides to that coin. Maximum growth could also equal maximum loss if we if we have the wrong thing. So we have to identify with colors where our money is. As we approach retirement and as we go all the way through retirement so red, let's start with red Red means risk. That's a place where you can have maximum potential maximum horsepower potential with your growth, you could have a lot of growth, but you could also have a lot of fees, expenses, commissions and loss on. Now you have that you're talking stocks and bonds and useful funds. All the things that real estate variable annuities that you know do. It has traditionally been the safe in place to put money, but a variable annuity means your money to go up and down. And I don't like that kind of account when we're talking about a lifetime income we can never outlive. We don't want any variables. I don't like variable mortgages. I don't like variable interest rates on credit cards. I sure don't like variable annuities, but we look at stocks and and a lot of times people say, Well, I can't I can't compete with the big boys So I'll buy a mutual fund because if you buy an individual stock, you're going against all the big boys. It's you against Warren Buffett. Hey, has teams of people folks that air managing money. So mutual funds are a collection of stocks in the basket otherwise known as mutual funds. So it's a way of getting individual stocks without having to take the risk of individual stocks you have built in diversification and mutual funds and also E T f C exchange traded funds. Same thing collection of stocks in a basket. And so we just have to know that somebody told me the other day I have diversified. I have five different mutual funds. Then we looked at the mutual funds that they said they were diversified. They thought they were. They said, no, we don't need your planning where you're diversified ourselves. We have five mutual funds. When we looked at each one of those mutual funds, the top 10 holdings of the mutual funds, all five of them were basically the same. Well, they're duplicate Apple and IBM. You know, all the big companies. Eso That's really not diversification, that is. It s so I think we need income diversification and investment Diversification, not just having all our money in the risk bucket, but we need to diversify amongst the colors. All right, so then we have yellow accounts, yellow accounts or bank accounts, C d s, their liquid money. It's money you put under your pillow. It's money that's not gonna grow. It's not gonna go much at all. If it all but its liquid 100% liquid, you have to ask yourself, how much money do I need tomorrow or why need with an emergency? Then you have make sure to have that money in a liquid account. Safe, safe. But but but safe is losing money safely a lot of times because you're not keeping up with inflation. Therefore, you're buying. Power is going down. Inflation is about 3% annually as we look through history, and we wanna make sure that our investments return at least that to keep up with inflation so again have to have some liquid money but not too much liquid money. So then where do you put the rest of the money? Well, I've talked about income planning and the green accounts cover this. These air specialized annuities, bank accounts, what places where we'll bank accounts for the yellow. But certain bank accounts like CDs, where you lock your money in for five or 10 years. You get a higher interest rate, and it's not liquid, so therefore it's in the green account, but you can't lose it, but we need to look at ways to get income and you look at your lump sums these days you've built up in your 41 K plans, which are red accounts, and you're trying to figure out How can I get some of these red balances into green accounts where have a lifetime income? And so we can tell with certainty. We could tell you your number based on the amount of money you put into the green account today, in years from now, how much you could get for income for life from that, and it's very important. Have lifetime income. Have your own pension plans. That's why we love the green accounts. But again, perfect combination. Red, green, yellow. How do? How do I know Coach Pete? How do I decide how much I have in those green accounts? I used the rule of 100. You take your age, you put a percentage after it. So, Chuck, you're 62. Not quite, but let's just say I am so 62% of his money should be in a safe account of Green account. The other 38% of his money can be in those red accounts, and so there's a rule of thumb. But it's all what you want to do in the future and making sure that you have money put aside that's never gonna go away regardless of what happens in the market, so that you can continue to do what you want to do all the way through the future. And folks, if you're interested in finding out what true income spectrum planning will be for you showing you the red, green, yellow looking at where you are right now. But more importantly, designing a plan to get you where you wanna be all the way through the future and having this proper utilization of the green Zone, the green accounts, all you have to do is give us a call, you see on the number you see on the screen right now. Uh huh, Yeah,