Winning the Money Game - The Invested Life Season 2 Episode 3

In this episode, I draw an analogy of winning the money game with my favorite sport...football!  I explain that in order to win the money game, you have to think of your financial strategies like building a championship football team.

With Tom's current investments in real estate, I make an analogy that this is like having an offensive line - protecting your quarterback, or in this case, your treasured assets - those assets you value most - your home, your income, your peace of mind.

It's your protection - it moves slow and steady, but it's there for you.

As your team develops a passing game, such as mutual funds or ETF's in your portfolio are much like your wide receivers.  These are investments that can line up wide and take advantage of opportunities in a fluid income environment - an investment that can involve higher risk and reward.

Your running back, however, can make short, concentrated gains - much like the gains you would expect from savings accounts, annuities, and CDs.

So after having a good time on the gridiron, it's time to clean up and conduct a financial workshop.

Tom invites me to his office as a guest speaker helping educate some of Tom's existing and potential clients.  I get to bring to light how following traditional financial methods aren't work in a shifting economic environment.

For example, I share how 401(k) plans have lost over 43% of their value between 2004-2009.

When considering alternative financial strategies, I share several points:

  1. Invest in You - take responsibility for your own financial education and health.
  2. Don't Fall into the House Trap - ask yourself if paying off your home is more important than having financial liquidity.  Equity is a 'Dead Asset' - it earns no rate of return and worse, isn't liquid.
  3. Consider ETFs as a diversification tool for liquidity and upside potential
  4. Utilize a self-directed IRA - this is special IRA you can establish to invest in real estate, gold and notes not usually offered by brokerages and banks

Lastly, I propose that if Tom decides to retire early, he should diversify his investments to insure the ability for him to maintain his current lifestyle.

This is a challenge that we face today.  Before, it was the fear of dying too soon...now it is the fear of living too long and having enough money to allow us to live a quality life in financial dignity.

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