How Does This Keep Happening?

Today's Newsletter:

• My Latest

• How Does This Keep Happening?

• 5 Mistakes I See Most Often

• A Money Question

My Latest

This month one of my favorite pieces of content was a recent YouTube video I did.

For many of the athletes and entrepreneurs we help, they face this weird conundrum. Post contract or sale of their business they are richer than they have ever been (on paper). Yet they feel poorer due to the lack of consistent income coming in.

In this video, I walk through a hypothetical plan for an athlete (applies to everyone). You will learn what four things I look at and how those things effect the overall plan.

You can check out the video here. 

How Does This Keep Happening?

I have four kids, three girls and a boy. They range from 8 years old to 3 years old.

Without fail each day, one (or all) of them will inevitably do something that makes me thing, “How does this keep happening?”

Some examples of this include:

• Smashing fingers in doors

• Thinking the dinner menu is like a 7/11

• Wanting a toy they haven’t played with in years (sibling has it)

It is incredible to see the same thing happen over and over again. Yet, then again how would they know any different.

The only way is if someone with experience told them, “Hey dudes (what I call them) if we keep doing X I promise Y is going to happen….and you won’t like Y.”

I have realized much of the same happens with personal finance.

Mistakes happen, often the same ones…over and over again.

They happen for various reasons. Yet, the one constant is because their isn’t someone letting you know what is going to happen.

Remember, you need to have someone that has experience seeing that problem and mapping out the solution. If not chances are you will make the same mistake as the last person.

Compounding that issue is money isn’t something we openly talk about. Holiday dinner don’t usually consist of conversations about your latest tax move, cash flow predicament, or investment thesis.

So, in an effort to help you avoid some of the most common mistakes I see, we are going to talk about them today.

Let’s dive in!

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5 Mistakes I See Most Often

1. Not Planning For Taxes

I hate taxes. I really do, they are confusing, frustrating and even we you do them right you question if the IRS got your payment. Well guess what? They are not going away.

Since they are not going away you better start planning for them. This newsletter will come out as we enter the second week in March. If you are just now starting to think about your 2023 tax bill, that is a problem.

Taxes are a lifetime game and the only way to win that game is to plan.

The IRS sets the rules but you get to determine the strategy. Year and year out I see new families come to us and they have never had proactive tax planning. This is at the core of everything we do.

It should be the same for you, plan for taxes now or regret it later.

2. No Diversification

The only free lunch in investing is diversification. It is the single best way to reduce your risk and still earn the return you deserve.

Yet, time and time again I see athletes, entrepreneurs, and key employees with little to no diversification.

Diversification comes in two forms: your investment portfolio and your life.

Let me explain…

Investment portfolio: This is making sure your chips are spread out across multiple bets. The biggest pitfalls we see is over concentration to a single company (looking at you entrepreneurs and key employees) or over concentration to risk on investments (looking at you athletes and entrepreneurs).

Your Life: Your income is your single greatest way to build wealth. Increase that and watch your net worth follow along. Yet far too often I see little to no income diversification. This can come in two forms. One is income diversification from the types of investments you own (cash, bonds, stocks, real estate etc..) and the other is skill diversification (your career, skill set, and job). You want to create a diverse basket of assets and skills to provide as much future optionality as possible.

Risk is what is left after we have planned for everything. Diversification reduces risk, don’t ever forget that.

3. Optimizing Retirement Accounts

The first thing human resources does is let you know if the company has a 401(k) account. For the vast majority of people that is where optimizing retirement accounts ends.

The proper retirement accounts, strategy around them, and thoughtful distribution of them can make all the difference.

We have clients saving $100,000 or more in future taxes by optimizing their retirement accounts.

We look at everything from:

• IRAs

• SEP IRAs

• Roth IRAs

• Solo 401(k)s

• Roth 401(k)s

• Traditional 401(k)s

• Cash Balance Plans

• Defined Benefit Plans

Yet picking the retirement account is just step one.

Step two is understanding how to optimizing it each year.

• What tax rate are you in?

• What tax rate will you be in?

• How does the current year benefit look versus the future year benefit?

Step three is figuring out how to maximize the distribution of that money.

• What strategies should be considered?

• What is the best way to take money out?

• How does a one year strategy effect my lifetime tax bill?

Retirement accounts can (and should) play a large role in your overall plan.

4. Thinking Good Enough is Enough

This one is a bit personal to me. I can’t tell you how many times I have seen a prospective client come in and my first thought is “this could be so much better”.

The reality is you need to make sure you have experts on your team. By experts, I mean people that are the best in the world at helping you optimize your situation.

You have put in too much work to not have it.

Look, my recommendation to everyone is to always be evaluating your financial team.

Are they the right people for the stage I am at today?

If not, explore what is out there.

Find advice that is specific to you.

5. Wanting to Exit Without Planning For It

You know that friend that doesn’t do any planning but sends you a random text on Thursday about a weekend trip he wants to go on?

Well, I see a lot of people do the same thing with their financial life.

Frankly, it makes sense. We are so head down building our career often times we never come up for air.

Then when we do, we realize we want to do a 180 degree turn.

The thing is, life and money don’t work like that. To optimize both we need to be planning around them.

What do you want to be doing in 3 years? (You know…your perfect day).

If you can’t answer that question, consider spending a few minutes with it today.

If you can answer that question, consider this: Is your financial life taking the incremental steps necessary to get you there?

Remember, personal finance is a game of little steps multiplied by time. You need both and they both start with knowing where you are going.

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I have seen hundreds of balance sheets. The five things above are the most common things I see. I see them over and over again.

They make me think, “How does this keep happening?”

Just like my kids, we all need someone in our corner to let you know what is around the bend.

Until next time my friends!

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A Money Question

What is one thing you have always wanted to do?

A question you have gotten asked since you were a kid. So here is my challenge, come up with your one thing and then ask yourself are you making progress towards it. It could be a new career, dream vacation, or sports car.

You don’t have to be able to attain it tomorrow but you can have the a plan in place to get there.

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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.