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Missed Fortune – Why Flexibility Is Essential To Success

Posted on | January 20, 2014

Being Stubborn is Costly

In the New Testament Gospel of Matthew we find a series of simple but beautiful lessons known as the Beatitudes. Part of their beauty and simplicity is the fact that our own spiritual maturity determines just how deeply we comprehend them.

To those profound lessons, let’s add one more Beatitude:Blessed are the flexible for they shall not be bent out of shape.

This is an easy lesson to recognize because, at some point, most of us have experienced the need for flexibility either in our selves or in others. Sometimes we’ll see it in a management meeting where we’re trying to address a particular problem our company faces and the manager overseeing that area of responsibility doesn’t wish to hear it.

In spite of any evidence that the current approach isn’t getting results, the manager stubbornly disregards the ideas others have recommended on how to solve the problem. He prefers to keep on doing things exactly how they’ve always been done.

There comes a time where the damage is so apparent that the manager finally acquiesces and agrees to implement the ideas others have been sharing. Sometimes it turns out to be too little too late.

Inflexibility is a guaranteed way to eventually get bent out of shape either in business or in life.

With more than 4 decades experience as a financial strategist and retirement planning specialist, Doug has consistently coaches his clients to maintain flexibility in their plans. Stubbornly clinging to just one particular way of doing things means risking not being able to adapt and adjust as necessary.

That lack of flexibility can make us miss our goals.

Correct Course When Necessary

To illustrate the importance of flexibility, let’s pretend you’re preparing to take a flight around the world. The end goal is to return to airport from which you departed.

If you started your journey just a single degree off course, how would that affect your return?

Failure to correct that one degree course deviation will take you more than 500 miles off course at the conclusion of your journey. A little flexibility is required to enable us to make minor course corrections as necessary.

Now let’s apply this lesson to how we plan financially for the future.

It is expected that life will throw unexpected curve-balls our way. They will come no matter how well we’ve planned. But with a bit of flexibility, we can correct our course and get back on track rather than simply being bent out of shape.

In financial terms, this means that in order to remain flexible, we have to maintain liquidity.

This requires being able to access our cash when we need to make changes,  to put money aside, or simply take our money out without having to face penalties.

The folks who understand this better than most are those people who have lost money when their home’s value has dropped. The problem isn’t because they were leveraged, it’s that their investment wasn’t liquid. Having liquidity gives us the necessary flexibility to make those necessary adjustments.

We also lose essential flexibility through investments that lack liquidity.  It’s important that our investments are structured such that if our home were to lose value, our equity would still remain safe. It’s also a good reason to rethink keeping our retirement money in a 401(k) or an IRA.

Remember, 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 comes with a steep price tag.

Our goal should be to have liquid assets safely earning a predictable rate of return. We call this the LASER test and any investment that meets each of these qualities is likely to be one worth going after.

Tax-advantaged or tax-free savings plans are where we find the kind of flexibility, liquidity, safety, and predictable rates of return that won’t leave us 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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