Can You Access Your Wealth When You Need It Most?

Access to Your Money

The most important thing for your finances when things go south is to have access to your money. Needing access to your investment accounts in an emergency creates a logistical hurdle. Holding investments that take weeks or months to sell can pose big challenges.

History is full of people who thought they had access to their money. Yet, due to some sort of financial “optimization,” they did not. If you can’t access your wealth quickly, does it even exist?

Simple Portfolios Matter

When constructing investment portfolios, I only recommend securities that trade daily. These securities should withstand past crises and allow for easy trading. Keep it simple. You don’t have to buy complex financial products to invest wisely. This means my clients' wealth is accessible whenever needed.

Importance of Liquidity

To have liquidity, we must invest in things that trade on a daily basis. Prices move from day to day, reflecting the opinions of traders. This can be a downside to liquidity, as we see others' opinions about our portfolio on a daily basis.

Have a Plan

If our investments receive bad “news” on a particular day, some investors may panic and sell. Prices may drop well below what is fair value in the long run. That’s okay if you have a plan in place that leads you to the long run. Remember, we don’t ever want to invest funds that we will need in the next five years.

Your Thoughts

So, what do you think?

• Are your investments fully liquid?
• If not, are you certain you are being paid a higher return for locking yourself in?
• Do you watch your investments daily?
• Have you seen them swing in a frenzied manner when important “news” hits?
• How did that make you feel?

To share your comments, send me a direct email at Joe@BestFinLife.com.

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