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Financial Planning


min read

September 15th, 2020

Planning the Process of Accumulating Assets

Building up your net worth and accumulating assets is one of the most thrilling and simultaneously risky, stressful experiences of your life.  From a personal standpoint, you are excited to buy a house (or car, boat, stocks, etc.) and start a new chapter in your life, but on the financial side you may feel anxious or worried.  

On average, individuals begin accumulating assets in their early 20s and usually build through mid 40s to early 50s before moving into a protection then distribution phase. 

During this building period, you may be paying off large amounts of debt and facing high household expenses as your children age. In other words, your debt to net worth ratio is not looking too hot.  On top of that, individuals in this asset accumulation phase typically lack concern for existing risks.  Needless to say, planning before you accumulate assets is key.

Picture this: Amanda is 22 years old and recently graduated from college.  She wants to buy a car, but also needs to pay off her student loans.  She struggles with managing her money and battles spending her excess cash on bottomless mimosas versus saving it for a rainy day. She has little in savings and often rings up a credit card bill she is unable to pay in full that month.  

If Amanda were to continue down her current path, she would eventually run into a financial trap where she would be forced to finance the majority of her life and spend more on interest than toward her savings.  She would begin pulling money from the wrong accounts paying higher than needed taxes and early withdrawal penalties. In order to support the bills, she would be forced to work more and longer in life.

This situation is easily preventable with a Financial Planner’s help.  By taking a comprehensive look at Amanda’s household finances, together they could create a plan to help her balance paying off her debt while building up her retirement portfolio.  As her portfolio grows: accumulating assets and increasing her financial independence, Amanda will have the freedom for boozy brunch with friends and buying the new car.

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