Wealth is not a bad thing to have. In fact, at Factum Financial, we work with individuals, families, and small businesses to grow their assets so they can achieve abundant wealth. However, we also stress intelligent planning along with growth. A large amount of money in the bank can be comforting and provide a sense of security, but it can also be detrimental for a multitude of reasons if you don’t have a strong financial plan and a strategy for the future. Financial education is important for all walks of financial life. Despite how luxurious extreme wealth or even just a healthy cash savings might appear, there are pitfalls on the road that people with wealth need to avoid.
The Rockstar Mirage
We see the extremely wealthy every day in the media. Even if you don’t pay attention, it’s hard not to notice the extremely wealthy and their behavior in some way. These pictures of wealth are a mirage. Athletes and musicians make millions of dollars a year and live lavish lives, but they either have financial counseling that advise them on how to remain wealthy or they are woefully unprepared for their financial future. Think of people like MC Hammer, who was reportedly worth over 33 million dollars at the height of his career but went bankrupt in 1996, less than ten years into his career. As of 2013, Hammer still owed some $800,000 in back taxes to the IRS. Meteoric rises and historic falls among the rich and the famous are surprisingly common. An estimated 78% of pro football players have gone bankrupt or experienced extreme financial stress within two years of the end of their career. Lottery winners often end up bankrupt within a few years of winning. The point here is that sudden wealth can be deceiving and without proper financial education, abundant wealth can cause more of a headache than most are prepared to handle.
Socking Away Extreme Savings
Extreme wealth isn’t the only thing you need to examine while you make your financial plan. While millions of Americans are living paycheck to paycheck, many more are practicing sound savings of their cash. This is a good practice! However, there is a point at which you can have too much cash in the bank. Experts recommend somewhere between three and six months salary as an optimum savings goal, depending upon your industry. Having more than that in your bank is not a bad thing, necessarily, but your money isn’t working for you either. When cash sits in the bank at a low interest rate of, you can actually lose buying power on that cash. Inflation is the culprit. This effectively eats any interest you earned over the year and makes your cash saved worth less. There are way more effective options. For example, why not take your emergency savings that’s just sitting at a horrendous interest rate and put that money into a Dividend Paying Whole Life Insurance Policy, which earns 4% guaranteed? If you have socked away more than you need to survive, you should put your money to work for you.
Making Your Money Work For You
While traditional financial planners will tell you to take the money that you have saved or earned, be it a small amount or a lottery sized sum, and invest in things like the stock market. However, if you have been paying attention to the market this year, you know that we are experiencing a high amount of volatility right now. Why should you take the money out of savings and take massive losses on it with the stock market? That doesn’t make sense.
Instead, take that money and put it to work for you with Infinite Banking. Infinite Banking uses carefully structured Dividend Paying Whole Life Insurance and puts you in control of your funds, which gives you the ability to grow your wealth, use your money to fund your financial goals, and protect your savings from unnecessary losses or taxation. The Infinite Banking Concept is accessible to anyone that wants to build their financial future on time-honored practices that work.
Factum Financial Wealth Strategists are experts in designing a banking system that is specific to you. Your financial goals are attainable and we can help you get there. Contact Factum Financial today for more information.
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