Private Reserve Strategy
The biggest benefit of Comprehensive Financial Planning is the "strategies" that we build and help you deploy. This video will demonstrate one of strategy that often makes the biggest impact on building our clients wealth while avoiding wealth transfers. A key term you might want to remember after watching this is "collateral capacity" which may be more important than "net worth".
Post-Video Points and FAQ: Read this after you watch the video.
The following is based on FAQ's we receive all the time:
#1 How much of your investment account can be used as collateral?
Answer: Average of 50% at most banks / institutions due to the downside risk.Although we believe in having money invested for the long term (this is one of the services we offer), there must be a balance of cash outside the market that can be used as collateral.
#2 How much of your 401k/IRA can be used as collateral?
Answer: 0%. This is because the money cannot be accessed without taxes, tax penalties, and market risk.
FAQ: I thought I could do this with my 401k via loans? Not true because a 401k loan does not allow you to continue earning interest on the loaned money which means you would "re-set compounding" as we explain in the video. There are other risks where a 401k loan should never be used. We feel that if people were taught about balance and having access to capital via collateral capacity, most 401k loans could be avoided in the first place.