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Flipping the Switch
My Latest
When Compounding Stops
Flipping the Switch
A Money Question
My Latest
Every year we review our clients’ tax returns.
We do this for two reasons:
The tax return is the foundation of personal finance (it shows everything).
We want to make sure everything is correct.
It has been so valuable for our clients that I wanted to show you how you can do it as well!
My latest video shows you the key areas to look at and will turn your tax return from Greek to plain English.
You can check it out here ⬇️⬇️⬇️
When Compounding Stops
We are in the middle of MLB spring training and inevitably you will hear story after story of offseason progress.
They usually start with something like this, “This player is in the best shape of his life.”
Cue the eye roll…but look the reality is a lot of these guys are in peak physical shape.
After all, they have spent the better part of the past 5 months training week after week.
Simple Formula = Gym + Training + No Games = Best Shape of Your Life
Now fast forward 5 months and you will see this:
Games + Limited Training + Mental Grind + Constant Travel = Diminished Physical Condition.
Yet remember the entire goal of the training was to play the games.
You see money and our net worth is a lot like that.
We spend decades building it up (the offseason) so that we can use it down the road (the season).
Yet we often get into the season (time to spend) only to sit on the bench.
That is what we are going to talk about today.
Let’s dive in…
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Flipping the Switch
I have previously talked about how most diligent savers leave more in their legacy bucket than they intend to.
Said another way ~ They spend too little and save too much.
Today I want to take this further and talk about spending (playing the game) even as you are continuing to compound.
You see a lot of the families I advise look like this:
Significant Income + Significant Future Opportunity Set
They have a business they hope to sell in the future.
Their skillset has them on the verge of a promotion.
They are on their way to a life-changing contract.
Their net worth isn’t fully realized yet they are in a season of opportunity.
They have young kids.
They have their health.
They have a once-in-a-lifetime opportunity.
Said another way ~ The time to spend their money is today.
My goal and frankly my job is to help them maximize that season of opportunity while avoiding financial ruin.
To illustrate how I think through this let’s use an example:
Jim and Kristen, both 40 years old, own a business worth $10,000,000.
They earn $1,500,000 in income but have saved just $500,000 for retirement.
They currently spend $500,000 per year.
They have three financial outcomes they want to create:
Build a memory bank with their kids
Buy a vacation home this year
Create financial flexibility
Traditional financial planning says you should focus on saving for retirement (financial flexibility) above all else.
That is what our world teaches us ~ I feel differently.
My plan would be first to show Jim and Kristen what they need to save to create financial flexibility but not necessarily drive towards that outcome first.
To spend $500,000 off their portfolio they need roughly $12,000,000 saved.
Yet the priority is executing on the vacation home and the memory bank.
Data shows that 95% of the time spent with our kids happens before the age of 18.
Their desired outcomes are time-bound.
That vacation home flows to the memory bank.
That memory bank is tougher to fulfill the older everyone gets.
So you want them to stop compounding towards financial flexibility and spend more today?
Yeah, that is exactly what I want them to do.
What I articulate to clients is the best-case scenario and the worst-case scenario.
Best Case
We optimize for the vacation home and memory bank while the business continues to grow.
We reach financial flexibility through savings in future years and the ultimate sale of the business.
A win-win-win.
Worst Case
We optimize for the vacation home and memory bank but the business falters.
We adjust course, start renting out the vacation home (or sell it) still optimize for the memory bank, and shift our future lifestyle spending.
A win-win-win.
The biggest mistake I see families make is they think financial planning is a pass or fail.
The analogy I use is your plan is like a plane taking off.
We are going to talk to air traffic control and chart the most optimal course.
Often we can execute the plan and cruise in smooth air but other times turbulence hits.
That turbulence, when planned for, isn’t going to crash the plane but requires a mid-flight adjustment.
Either way, we still reach our end destination.
Yet I see families too afraid to take off.
Fueled Plan
Clear Runway
Drawn Up Roadmap
Yet they are sitting on the runway waiting for their jet to turn into a G5 before taking off.
Fly the plane already!
Now look, human emotion plays a huge role in this and this is why I can’t stress enough having someone in your life to help you battle test your thinking.
Trust me I get it.
I know I need someone unemotional about my money to help me optimize it.
For you, that might be a professional team, family member, or trusted friend.
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I am so passionate about this situation because it mirrors my own not too long ago.
I was sitting on the runway, ready to do a few test flights but never quite ready to actually take off.
Today, we are flying, and honestly, I have no idea what my life will look like in 3, 5, or 10 years.
Yet, I can tell you that my plan is prepared for both a smooth ride and some turbulence.
The beauty of this is that I am enjoying the journey, creating my optimal outcome along the way.
Until next time, my friends!
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A Money Question
What activity (that money allows you to do) do you enjoy the most?
For me, it has been traveling with my family.
Many of my best memories as a kid were trips we went on as a family.
We still tell those stories at Holidays and I want my kids to have those same stories in a decade.
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3 Ways I Can Help You
💰 Schedule an introductory call with Moment. We help athletes, entrepreneurs, and key employees build and protect wealth.
📹 Check out my YouTube channel. A safe place to get smarter with your money.
📷 Interact with me on Instagram. Where I provide bite-sized daily content to level up your money game.
Moment Private Wealth, LLC is a Registered Investment Advisor, located in the State of Missouri. Moment Private Wealth provides investment advisory and related services for clients nationally. Moment Private Wealth will maintain all applicable registrations and licenses as required by the various states in which Moment Private Wealth conducts business, as applicable. Moment Private Wealth renders individualized responses to persons in a particular state only after complying with all regulatory requirements, or under an applicable state exemption or exclusion. Nothing in this content is intended to be, and you should not consider anything in this content to be, investment, accounting, tax, or legal advice.