Knowledge, skill, and personalized care

New website encourages client to seek estate planning refresh

December 29, 2016

Clients called me recently to discuss a potential change to their financial plan.

They were planning to spend $100,000 on the purchase of a new vehicle and home renovations within the next 12 months. We had set aside this amount in a guaranteed liquid investment, which in today’s interest rate environment is a negative real return after factoring in taxes and inflation.

After reviewing their initial proposal, I prepared an alternative financial plan where, through a secured line of credit, they would borrow the money for their renovations and car purchase. I compared the long term impact investing at 1% with investing this amount in a portfolio that could generate about a 4% dividend yield and provide growth of capital over time.  This scenario projected a cash flow to allow 10% of their Line of Credit to be retired annually over the next ten years.

Using very conservative assumptions, the revised plan showed that this strategy had a very high probability of being the superior option. I proposed “laddering” guaranteed fixed income vehicles to supplement the dividend income to meet the next three to five annual debt retirement payments, and investing the balance in a conservative portfolio to generate better rates of after-tax returns. Seeing the likely benefit, my clients decided to move forward with the strategy I developed for them.

Financial planning is critical to making informed decisions.  Plans we develop seldom stay static, but are revised to meet changes in the markets or the client’s situation.  Mailey Rogers Group’s wealth management practice believes that a financial plan is an invaluable tool to prudently structure investment portfolios that meet the risk tolerance, time horizon and cash flow requirement of our clients. We were pleased to help these clients, and would be pleased to help you in 2017 and beyond – if you’d like to review your financial plan, please give us a call. Happy New Year!