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Five Fundamentals

Once you know your financial position as indicated in your Financial Plan, the next stage is an analysis of your financial habits. Similar to proper health habits, practice proves that adopting proper financial behavior is critical to building wealth in the long-term and dealing with financial emergencies if required. The Financial Plan is based on an analysis of each client's financial conduct based on five key principles, otherwise known as The Five Fundamentals of Fiscal Fitness ©.

The Five Fundamentals are:

1. Save at least 10% of annual income income - We will measure whether you are living within your means and how well you are balancing future needs against current ones. To fund your future needs you must save and invest at least 10% of everything you earn.

2. Have sufficient liquidity - - We will measure your ability to pay bills and fund variable short term cash flow needs. This includes your ability to survive three catastrophic events within a six month period and make mortgage payments for 24 months.

3. Fully funded pensions - we will measure your utilization of qualified tax shelters.

4. Buy the right house for your budget and be a savvy real estate investor -We will assess if you own the appropriate size home and measure positive financial leverage and inflation protection. Furthermore, we will measure your diversification among three major asset classes of Interest Earning, Real Estate, and Equities. Each class provides major economic functions:

  • Leveraged Real estate serves as an inflation protection,
  • Interest earning provides safety & deflation protection, and
  • Equities enable growth during times of prosperity.

5. Pay off credit cards and consumer debt - We will measure your consumer (or "bad") debt.

Financial Indicators

Financial Indicators

Example Result from Financial Plan Report

Tax and Investment Advantages

Another important part of the Financial Plan is an analysis of the money you "waste" by not taking full advantage of tax shelters and more efficient investment vehicles. Maximizing the tax shelter offered by the US Government with respect to money deposited into retirement plans is the safest and fastest way to increase your wealth.

Investments are also an area where great savings can be achieved. By choosing more efficient investment vehicles and reducing the costs of managing your money, you can accumulate significant wealth. The Financial Plan provides you with key advice related to tax and investment savings. Our report will indicate the huge amounts you can potentially save over one year, ten years, and until retirement.

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