The Nest Egg Disappearing Act”
Your parents did the right things – at least as they were taught at the time. They had a very nice nest egg and things were looking pretty secure. They were planning to retire early, or have already retired. They trusted the experts to help make the decisions, they contributed to the 401K, saved, invested in real estate, bought gold, lived below their means, and shopped frugally.
With the recession brought on by the housing bubble, their real estate investments are now upside down, their 401 K depleted, some by as much as 75%.
You may be able to teach an old dog new tricks, but chances are, your parent’s money habits are already engraved and not likely to change easily. So, you may find yourself overwhelmed with hearing about their debt, or you may need to take matters into your own hands to help rebuild their nest egg before their entire existence is built into your budget.
Become more involved in the Nest Egg Protection process:
Hopefully, your parents trust you and will open up about their finances, let you see the check book, and so on.
The experts did a horrible job, yet they bankrolled while our parents lost. That not only p….d me off, but it made me wonder how that was possible. It turns out, these investment Brokers make money on the transaction, regardless of the performance of their investment decisions. The more transactions they process, the more money they make. Cha ching! They don’t really need to care if they make us money or not. The good ones will. Their reputations are on the line, but even then, there are few guarantees with teeth in this business, so even money invested with Warren Buffet Brokers still lose money from time to time.
I took courses and trained as a Paralegal, learned how to Day Trade, got licensed in insurance, and took the course in securities, and hunted till I found a way to earn money in the precious metals industry. I actively went on a self-instruction journey to learn everything I could about money and finances.
To have a nest egg is important because with age comes the need for labor free income and this is when your parents begin to cash in on their retirement fund. In order to help them protect it, there are some action steps I strongly urge you to consider and help them implement, whether you are doing it for them, or using a financial planner.
Protecting the nest egg:
Identify and Inventory. What are the treasures? Whatever you are likely to say, rethink it through the eyes of a Katrina, or home-fire victim. Now, let me ask you again. What are the treasures? Is the answer different this time? If you decided that there are some trinkets, pictures, locks of hair, first tooths and any other items that matter to your parents, then as you identify and inventory the treasures – include ways to preserve them as well. Of course, the traditional stuff like jewelry and land titles count as well – but I just wanted you to think this through, because protecting your nest egg is the process of protecting your legacy. For the Christian, this is an important question to ask and answer because the Bible says Luke 12:21 “So is he [ a fool] that layeth up treasure for himself, and is not rich toward God”, and in verse 34 “For where your treasure is, there will your heart be also.”
Diversify. I agree with Tony Robbins’ suggestion to have 3 buckets: (a) a security bucket; with low risk investing (b) a growth bucket; with riskier, higher returns promised adventures, and (c) a dream bucket; where money is put toward the cool, just because stuff your parents want. Their risk tolerance will determine how that money is divide up that money, but do not ignore this strategy. The all your eggs in one basket – no matter how sure a thing it is, may as well be called gambling. The game here is PROTECTING.
Learn about Money. You don’t have to be an expert at art to know I am telling you garbage if I say blue and red make yellow. Basic fundamental knowledge will allow you to have your ears and mind ready to filter out the industry noise and know when you are being sold ice even though you live in Alaska. Have you heard the saying, when the rich and the experienced get together, the rich get experience and the experienced gets rich?
Your parents know what level of risk they can tolerate. They know the goals they have for their nest egg money. Even if they use a professional, they have every right to dictate how they handle the account, to demand a review of their stewardship, and to hold them to a higher standard. There is no reason to avoid learning how to help your parents handle their money. You may need to help them understand what the experts are saying.
Insure. Well, stuff happens; and if they are insured, they are covered! Insurance is one of the area many are tight fisted about, and unless mandated (as in auto insurance), some would never voluntarily buy insurance. Too late is the cry if your parents find themselves in a situation where insurance would have saved them from absolute loss; what is worse, with a crisis in their history, it may now find it impossible to find insurance no matter how much they are willing to pay. Insurance is JUST IN CASE protection, and no matter how much is paid into it, if the policy ever has to pay on a claim, the claim is usually way more than was put in, and way less than if your parents would need to be out of pocket.
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Buy gold and silver. Cash is devaluing faster than you could fill a bath tub. Has your parents considered using money (cash) to buy money (gold and silver), to make more money (profits as the value holds against the dollar, or increases) ? It just makes sense. Almost any portfolio will have investments in some form of gold and silver today. Personally, I hold the actual asset and not the paper printed ink version called a statement from some institution. Numismatic coins, bars and ungraded coins are tangible, easy to liquidate, and portable.
Secure it. Meet with a lawyer, financial planner or banker to discuss if transferring their nest egg assets to a Trust is right for them; keeping valuables and important documents – such as a will, deeds, gold, etc, in a bank safety deposit box, or a home safe, or keeping it off shore in a secret, investment friendly country are just some of the strategies that should be considered.
To your Debt Free Wealth!
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