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Mistake number ten is relying on common knowledge when it comes to financial planning. In today’s information overload era, it’s crucial to sift through the abundance of clickbait and ensure that what you’re reading is truly relevant to your financial situation.
For instance, when it comes to asset allocation based on age, the one-size-fits-all advice might not suit your unique circumstances. Factors like your income sources and spending needs should be considered. At Ewa, we analyze your income, expenses, and portfolio to tailor a personalized strategy.
Another common misconception is delaying Social Security until age 70 for maximum returns. However, this decision can impact beneficiaries more than your own finances. Sometimes, having that guaranteed income sooner can provide greater peace of mind.
In the world of finance, be cautious of online information, and seek guidance from a financial professional to make decisions aligned with your individual plan.
So mistake number ten is relying on common knowledge. So today there’s a lot of information out there from whether it’s social media, news outlets generally we look at it and for the most part it’s a lot of clickbait.
So it’s very important to kind of sift through that and make sure what you’re reading is actually relevant to your financial planning. One probably the most common example is how should I be allocated?
If you just Google this, for example, how should I be allocated as a 65 year old? The answer is probably going to come in and say that you should be somewhere between 50 50, 60 40, meaning stocks to bond split.
But that blanket statement may not fit your individual plan, meaning you may have income sources like Social Security, pensions, et cetera, that maybe you don’t need to be as conservative as holding 50% or 40% bonds in your portfolio.
How we approach this at Ewa is we really look at, one, what are your income sources? Two, what do you need to spend? And then three, what does your portfolio look like and how can we fill that gap? So we mentioned in an earlier segment here that it’s never taken more than seven years for a diversified portfolio to recover from a downturn.
Therefore, say our gap is 50,000 that we need to pull from a portfolio. We’d want to have seven times that $50,000 gap in safe assets like fixed income, cash, cash inside of a life insurance policy just available to you that you can pull from if the market’s down.
Another common example of common knowledge that we tend to disagree with is delaying Social Security until you’re 70 just to get the most financial rate of return, oftentimes with high net worth clients, the Social Security decision most often impacts beneficiaries.
So we see that maybe from a peace of mind standpoint. Having that guaranteed income coming in from Social Security can be more impactful for your life today versus beneficiaries getting a little bit more later.
So just two examples of common knowledge that we kind of tend to disagree with here at Ewa. If you’re reading about financial topics online, just be careful. There is a lot of stuff out there that, again, we feel is clickbait.
And most importantly, make sure that you’re consulting with financial professional and you’re making the decisions that make sense for your plane.
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EWA, LLC dba Equilibrium Wealth Advisors, is an SEC-registered investment advisory firm providing investment advisory and financial planning services to clients.
Investments in securities and insurance products are not insured by any state or federal agency.
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