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Missed Fortune – How To Keep From Being Bent Out of Shape

Posted on | December 9, 2013

Blessed Are the Flexible

Most of us are familiar with the 9 Beatitudes found in the New Testament Gospel of Matthew. How deeply we understand the lessons they represent can depend greatly on our own level of spiritual maturity. This is true in other aspects of our lives too.

Here is Doug’s 10th Beatitude: Blessed are the flexible for they shall not be bent out of shape.

This is an easy one to recognize because most of us have seen it at some time. Perhaps it was in a management meeting where we’re addressing a challenge the company is facing and the executive overseeing that aspect of the business simply refuses to hear it.

Despite all evidence that the current approach isn’t working, the executive digs in his heels and disregards the options that others are recommending on how to address the challenge. He simply cannot imagine handling the issue any way other than how it’s always been done.

At some point, down the road, the damage done is so undeniable that the executive finally caves and considers other solutions. But by that point it may be too little too late.

Being inflexible is a surefire way to find ourselves bent out of shape at some point, whether it be in business or in life.

As a financial strategist and retirement planning specialist for more than 4 decades, Doug has always insisted that the people he coaches maintain a degree of flexibility in their plans. When we stubbornly cling to doing things in one particular way, we risk missing our goals by not being able to adapt and adjust when necessary.

The Difference One Degree Can Make

Imagine you were setting out to take a flight around the world. Your goal is to return to airport that is your point of departure.

What would happen if you started just one degree off course?

If you stubbornly refuse to correct that one degree course deviation, you will be more than 500 mile off course at the end of your journey. A bit of flexibility is required to allow us to correct course when necessary.

Let’s apply that lesson to how we plan financially for the future.

No matter how well we’ve planned, life will throw unexpected curveballs our way. With a little flexibility, we can redirect our course and get back on track rather than being bent out of shape. In order to remain flexible, we have to maintain liquidity.

This means that we can access our cash when we need to make changes, put money aside or simply take money out without having to face penalties.

People who have lost money when their home’s value has dropped understand this better than almost anyone. But the problem isn’t that they were leveraged, it’s that their investment wasn’t liquid. Liquidity provides the necessary flexibility to adjust course when necessary.

Investments that lack liquidity also cost us in flexibility. This is why it’s essential that we have our investments structured so that if our home loses value, our equity remains safe. It’s also a powerful reason to rethink keeping our retirement savings in a 401(k) or an IRA.

If you touch the money in your IRA or 401(k) before age 59 ½, you’ll pay a substantial penalty. That lack of flexibility will cost you plenty.

Ideally, we should strive to have liquid assets safely earning a predictable rate of return. This is sometimes referred to as the LASER test and an investment that meets each of these qualities is worth going after.

Plans that are tax-advantaged or tax-free are the ones that provide the kind of flexibility, liquidity, safety, and predictable rates of return that keep us from being bent out of shape.

If you’re ready to learn how to put this knowledge to work for your future, visit with a wealth architect today.

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*Life insurance policies are not investments and, accordingly, should not be purchased as an investment

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