It Take Three to Tango: Safety, Liquidity, and Growth

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This is the Truth Network welcome to finishing well brought to you by Cardinal guy, certified financial planner belonged to Schild, best-selling author and financial planner helping families finish well for over 40 years of finishing well will examine both biblical and practical knowledge to assist families in finishing well, including discussions on managing Medicare IRA long-term care life insurance and investments and taxes. Now let's get started with finishing well, finishing well is a general discussion and education of the issues facing retirees guide.com are no advisors upon Schild CFP some insurance this show does not offer investment products or investment advice. Now I've got some really cool stuff headed your way today on finishing well on the title today show. It takes three to tango, safety, liquidity and growth and along with that not only do we get hot shower, certified financial planner.

We also get Tom Griffith who is actually the guy who helps me every time.

So we got both Tom and Hans today which you know when you add me into the equation just immediately ago Hammurabi, it does take three to tango with. You might also imagine that I would talk about your ballot. Talk about. Clearly, the Trinity right that that that something that we follow thought about over and over and over again. You know how exactly does this work and it does kinda take three to tango right Hans would you know in your finances. You know obviously if you're following the Lord particular father the son and the Holy Spirit together make up and II can imagine my life without all three in that the Holy Spirit right Jesus when in John chapter 14, when he was talking about is good that I leave because I'm in a send the comforter, which is the Holy Spirit that you know is there to guide you back into all truth and all the things he said and points to Jesus and in a course Jesus said on the way the truth and the life. No one comes to the father except through me. So he is the way to what the father which is part of the way that Jesus is the way so you noticed necessary stuff in order to tango, so to speak, enjoy life, but more importantly to to worship God in what comes along with that and so interestingly Hans Tom has come up with this concept of way of explaining what to do with your money through the idea of safety, liquidity and growth. This this trinity of money, so to speak that that really turns out to be helpful will become came up with really real time in talking to some clients who were trying to understand why we were placing their money in a bunch of different things okay we are doing asset allocation and they were given us some pushback on different things and then times that will really three characteristics of money that you look at and you can get to in any one investment which can have all three and that seem like people can understand it. I can set you up with something that say and then you can go get your hands on it that has liquidity but is there I can set you up with something that's gonna grow enough market that you get your hands on the money quick but it's not safe and so I wouldn't turn it over to Tom, but it is really a good concept and I think that understanding that is really going to help you understand a little better what you need to do with your money if it really. I came up with this concept because we get the question all the time. What should I do with my money.

I have this money. I don't know what to do it in an uncertain entered the and it really depends on what your goals are, what your needs are really trying to do with this money and so I came up with that idea to have people prioritize what's most important. Making you fearful of losing the money is in the quantity. How easily can you act with the money or the growth potential. How much can you want your money to potentially grow like Hans was saying there's nothing introductory which unfortunately a lot of typing while in all three that will get to that effect, but everything between safety and liquidity.

If you want the ability to most important things to you as you lose money and you want to be very easily accessible to you. You really talk about bank accounts, checking health savings account money market earning much right now we know they're very low earning places but a very fake anything in it very easy to get your hands on it. Liquidity and growth of it to more important things to your you want something you want to grow but you also want to get your hand on if you need it. You're really talking about traditional investments like stocks on mutual fund ETF things there are not very fake they could go up and they could go down the market for down but there easily. What unit you called it that we could sell the unit today and get you the money in a day or two and some people, they will. I really don't want to lose money want to be safe, but I wanted to grow but I have enough of the money.

I don't really need the liquidity teacher that brings in things like annuities or life insurance real estate CD things that have harder to get your hands on it.

If you needed but safer than some of the other traditional investments and you could have some growth in their things go well and so rudely setting that you know is a good night to give the context for the people to start thinking through how what is important to you and what vehicle can get to where you need to go really what it comes down to is most people need a mix of all three right immunity. We would never recommend someone have everything in growth with no safety and just shoot for the moon especially with our client cover retiree that they need to have some text in their never recommend everyone go on to something like real estate and have no cash on hand. Nothing they could guess that if they needed to and so really what comes in the play were really at the center of this of the three things is really a diversified portfolio that has a mix of all the things for years. He specifically solicits exactly condo where we go back to think about it. If you want all three which obviously all of us do, then take part just like with the Lord in all three right you gotta participate in and understand that there's things within those three that are themselves all decisions right right that the good point and so you know what liquid to thinking liquidity for start with you and that there are several things I can get you to where you need to go in the next and what what you picking it really depends on on what your needs are goals are and and that's when it comes in the play is not know. I want this part was okay now are down to reveal he snared there. Now we need to start figuring out what their needs. You need same with like you liquidity and growth as a okay you want to grow but you need active money. We still need to think about decisions of how much what mutual funds what stock how much you want and each thing part of the overall plan and so the center of all these that diversify per folio is really the goal of what we have a lot of clients to get to that by make much sense for them and that look different for all of our client because everyone had these priorities are slightly different than either slightly different might have some clients that have more of their money on that liquidity her side and less on the safety and then vice versa. And so, the next of all of the things really depends on you specifically, but thinking. It helped give a good starting point of you know what you safety and liquidity and this is an area we see people holding way too much cash discount frozen. There mark the stock market has gone up and up and up and some point, you know that theory is come back down to level off some sort of drastic crash work. People are afraid that so they go to the extreme of just put it on the bank and getting .1%.

We just see lots of people holding way too much cash way more than the need and at any one time so they think they got an emphasis on safety and emphasis on liquidity and they just completely ignore growth because there is a need for inflation cranking out to have some of your money and something to grow, so it will be more later tested me thinking through the three ideas that if I was sent down to this kind liquidity like how much money do you need immediately is because the beginning piece of the puzzle right to put together so that it fits what you think and that $10,000.

Some people that 20,000 30,000 for some people and maybe 50,000 70,004 some people who are very well do, but is certainly not 150 or 210 or 380 likely seen some of these people.

It how much money do you need to know that you can go get your hands on very quickly like that out of the bank, a rent check and my experience. There's many people that have way too much.

They even have their IRA cash sort of account and all around safety. There's there's alternative. This is what we do in financial planning. As we sit down and look at people all the money they have all the money they have coming in and then we look at what their priorities. We help them come up with their priorities and goals and their need for income and then we get them allocated all around the sheet were we get some money in a bank account and then we get some money invested in stocks and bonds. For many people.

Some people, not all, and then we use annuities and life insurance and real estate number of things to get him some of that safety and grow but not liquid. My experience to that a lot of those clients that are mostly in that safety and liquidity.

They have a lot of money in the bank. Is there some shame that they come in with an inward room or do a lot to try to either concerns and it's okay you already are� Got ready to go but inherently they kinda know that they're missing out on something that could grow but what really prevented them from doing that is the fear of loss and so a lot of times people don't really think about that. The options and that faking growth potential is there are things out there that can be very safe that can also grow giving up that liquidity feature and sent to Robbie Pierpoint. That's exactly why you need to start with. Okay, how much do you really need in this thinking liquidity that you can go get.

Usually there is some number for everyone that you do just needing cash that you just accept the fact that learning anything, but it's your emergency fund there for unexpected expenses. You know you need to replace the roof soon. You know that can be higher than someone who just replace the roof and so there is money you need to think cash so that the good starting point and then oftentimes eating them to view the other ones in the right proportion to what they specifically need I even gets that stewardship right. Like Jesus taught that it's his go barrier money in the holding and not trusting God you know or not doing what the server once you end up you know with gnashing of teeth and nobody wants that. So we got a lot more stucco again. This is brought to you by Cardinal guy.com you can go to Cardinal guide.com to get Hans's book the complete cargo guide to planning for and living in retirement as well as email Hans for any information you may want or book or now don't forget Tom email reach out to him as well will be right back more of it takes three to tango safety liquidity and growth. Hans and I would love to take our show on the road to your church and Sunday school Christian or civic group.

Here's a chance for you to advance the kingdom through financial resources and leveraging Hans expertise and qualified charitable contributions veterans aid and attendance IRA Social Security care and long-term care. Just go to Cardinal guy.com and contact Tom to schedule a live recording of finishing well, your church, Sunday school, civic group contact time to Cardinal guy.com that's Cardinal guide.com welcome back to finishing well certified financial planners now today about Pontius Pilate.

Tom Griffith, our show today.

Is it takes three to tango, safety, liquidity and growth and you know it's helpful when we actually take it through. Sort of a case studies to Tom share a story with us sure that we had a client, a radio listener but won't name names, but she came in and she sold her house her shoes in the process of selling her house was going to have a big influx of cash she was moving to help take care of her mother and that she didn't need the cash to buy a house that she had a place to stay and so she really pose the question what do I do with that money. She had an IRA as well from working in some other cash that she defamed up and so really pose this question to her role. What most to you and you know like I was mentioning earlier. She said all three, and so we can literally think through what is most importantly, if you had to prioritize these one 3330 that she came up with were safety is number one growth is number two in liquidity is number three because she really didn't need this much money to get her hands on and so we get okay let's sit down and think through what this could look like. And so, with safety being wanting gripping number two we went to that intersection between the two investments and we looked at her money. We took a portion of it and we purchased fixed indexed annuity that has no Florida theorist, you can lose any money and that based on the market, performances, knocking her down and said that Kenny meet those goals of the safety it didn't get some of the upside potential in the market goes but she did an investment that has upside potential growth with some downside protection that safety we use a portion of her money for that. The other part. So we had still needed to fill in the other bucket and so for the growth in liquidity.

We took that IRA.

We use model portfolio that we use with a lot of clients, but we have a mix of rock and bond that she is investing in and that way we can really take some potential growth potential is not a state of the annuity by habits liquidity where she needs money easily. That's where she can go get to the one thing with the annuity that I failed to mention that in the early years of that contract if you wanted a big chunk of that money. There are surrender penalties.

The most of them will allow you to access a 10% free, but if you wanted half of that money back your neck to pay some pretty hefty penalties to get and then the blood so we did the stocks and bonds for that liquidity and growth bucket and then we still needed some money in checking and savings accounts in the thinking liquidity portion because she had some unexpected expenses you didn't know what it was in the cost to go live with her mother. I mean there's some some unforeseen things that will come up and so we did leave enough money.

There were we were taking any risk with that we were earning anything with it but it was their first bending for her, was that that we left it with about 30,000 and checking and savings accounts. The other reason, because I got that number is, there is for her. Specifically, there is a potential that you've been a move to Florida at some point in the future to go live near her daughter. And so we wanted to leave enough cash.

There were she could put a down payment on a new home and not you that SHE was looking at violent hundred 1000 Dollar Pl. to live into something real small and so we wanted to leave at least 20,000 that if we needed to get it to do the down payment. We could do leaving with her 10,000 or so cash with the idea that were going to be replenishing that with the IRA making withdrawals from a tax and keep a very low taxes on that replenish the bank account and then still have the annuity over there were growing still being very safe and I just noticed you started $1000 month payment to her yet or what is her stock account for growth and liquidity account is pretty easy yet she has just moved look and you know, if need be.

Work will start accessing the 10% on the annuity but really going to need to do that for a while thousand dollars coming out of the IRA that her tax brackets. You can pay no tax. And that's really money that the command I give her some some supplemental income and and she's just going to be will be living fine. 303 just through a mix of investments and then tailored specifically to her and what needs are because we didn't anticipate her going to Florida this quick. She was really going to go to Florida after her mother passed away something didn't really work out with her living with her mother and take care of her all the details that the plan is flexible enough that liquidity was important they are and now she's exercise so we won't talk about another client who we met year and 1/2 ago right before the pandemic arrived and the pandemic started we met with them face-to-face and they had three to $400,000 all in cash and it had been in cash at that time were about three years because and I'm not sure how much cash before three years ago they sold all her stocks back in 2016.

We had an election there were really worried that it was going to go way down and then the opposite happened. And then we met them year and 1/2 ago and they were still happy that they still had three or $400,000 but they knew they were going to have is all in the bank and then we propose just doing something is not getting back into stocks as they work they didn't want a party that we were part of his money were significant amount of it into an annuity or a couple of annuities where they would run much better interest than they're getting from the bank and then they don't need access through $400,000. We still keep some of it in the bank so and they still haven't acted on frozen up with safety and you know we just we run into this and a lot of new client that is acting on this. We have some people that have just come into a lot of cash because they sold their home in California and their living in orange county in very successful, these are still much average people and she's a realtor and she you know it obviously done real well and they made a lot of money on their house just in the real estate market so they found themselves with almost $2 million cash in every mortgage on the bottom. Way back when it was small and they just paid it off the paid off over the years. So these people got a bunch of cash which is a nice position.

The then what you do with that.

They don't want any part of losing any money on it was in real estate for they thought about buying more real estate, but they they've Artie got a house in the place that they relocated so they were also worried about the real estate prices have risen significantly over the past year and so they're worried about Michael back. They didn't really want to go get into a lot more real. So what we use for them. This is not qualified money.

This is not IRA money. This is good old-fashioned money and they know how much taxes on the gain on the house. Help them with that and so we went to the we went to the report to million dollars with three buckets 500,000 in bucket one, 500,000 in bucket to 500,000 in bucket three and bucket one is just invested in stocks and bonds very risky.

Now is because they want some exposure in that he had bucket number two in bucket number three are all annuities and that therefore the future and they have very low liquidity on the there's very little chance to get a new million dollars next week, so they can get any part of that $500,000 in bucket one anytime because it's invested as TD Ameritrade and various things that brought mostly stocks mostly gross and they're also using bucket number one.

The liquidity provision pay themselves in income on top of their Social Security checks and some pensions that they have so you know which we were able to solve their problem and were not paying taxes on any of the growth in bucket two or bucket three cousins annuities and is just deferring pay taxes on that road some point then bucket to is really set up turn on income a lifetime income at some point then bucket three is just money that is designed to grow safely grow where not to lose any money in bucket so we were able to get them all three things around the circle.

All three pieces of you know that the three to tango Hansson lost the last bit in the last three be you just described, in which bucket was which case when you when you said that the one would give him.

I just lost me. Okay, let's go over that again real quick tactic number one is money that is invested in stocks and bonds, mutual funds, ETF's okay so they could learn some immediate right they could lose some, and that one but they probably get growth on okay yeah we don't have anything safe in there because that's what bucket number two in bucket number three ours there to save money okay okay and then bucket number two.

We put them in annuities and the annuities are designed and have a guaranteed income that can start at various points in the future so that not only is it safe and growing, but it also has a guaranteed number that they can turn on and at any point and it continued getting a monthly check for the rest of their life and then number three are the same type of annuities that they don't have income riders on them or the charges for income riders and did you really just just growth for its own sake, and they can take distributions that will manage this kind of money that is very say growing very liquid but it's just there for the future and make actually could turn on income out of that as well and if client in terms of the mix between safety and liquidity. They have other money that was not part of the bucket strategy that they did have often decide that meet that goal of the safety liquidity just money in the bank so that that the three bucket that we described not include that mix because they did have other money tell well that's perfect for me.

Thanks, but instead that's good. Well as you can see, it does take three to tango. If the ideas to get safety liquidity and growth and how cool is that that that you can mix these and again you can see that the real helpful to have some help and how all this works.

So that's why Cardinal guy.com. Of course Cardinal advisors is where you'll see a YouTube video coming up on this whole topic of the take three to tango so you can be able see that here in a couple weeks but we certainly appreciate you listen and then again just go to Cardinal guy.com for houses book as well as any comments or questions you might have Cardinal guide.com thank you guys would reach out thank you thank you finishing well is a general discussion and education of the issues facing retirees Cardinal guy.com Cardinal advisors upon trial CFP some insurance this show does not offer investment products or investment advice. We hope you enjoyed finishing well brought you by Cardinal guy.com visit Cardinal guy.com for free downloads of the show or previous shows on topics such as Social Security, Medicare and IRAs, long-term care, life insurance, investments and taxes as well as constant best-selling book the complete Cardinal guide to planning for and living in retirement and the workbook once again for dozens of free resources past shows to get Hans book go to Cardinal guy.com if you have a question, comment or suggestion for future shows. Click on the finishing well radio show on the website and send us a word again that's Cardinal guy.com Cardinal guy.com. This is the Truth Network