Asset location is as important as asset allocation

20Are there really seven secrets every rich person knows?

I can’t tell you how excited I was to read Cameron Huddleston’s article on Go Banking Rates’ website based on the headline! But as with most headlines, I was sorely disappointed with the actual article. It’s not that all seven things aren’t good advice. It’s that none of them are secrets. They are just common sense, and a couple of them are just flat out lies!

I don’t want to dive into all seven. I just want to focus on number five: Asset location is as important as asset allocation.

The article quotes Define Financial CEO Taylor Schulte, who says: “However, the rich know that asset location is just as important as asset allocation. In other words, the rich don’t keep all of their assets in one type of account, such as a tax-deferred retirement saving account. Wealthy people also have investments in brokerage accounts to limit the impact of taxes in retirement.”

This immediately tells me that Define Financial is in the same cookie-cutter model as far too many others. It’s the ‘one investment fits all, so put your money in mutual funds and annuities’ model. In my opinion, that approach is so far off the mark. The more accounts you open at Define Financial, the better it is for them, so Schulte’s advice is to open more accounts. How convenient.

As one of the creators of Preventative Wealth Care, I want to share a true secret with you. To become wealthy, and just as importantly stay wealthy, start by preventing losses while ensuring you still have unlimited growth potential. Didn’t know that could be achieved? Then I guess my secret really is a secret after all.

What is Mr. Schulte’s advice on this? I’ll let him sum it up for you:

“The types of investments you have in your accounts can have a dramatic effect on your long-term returns. Typically, it’s best to keep securities, such as bonds, mutual funds and dividend-paying stocks, in tax-deferred retirement savings accounts and individual stocks in brokerage accounts.”

I will give him some credit in that he is exactly right that the types of investments you own can have a dramatic effect on your long-term returns. Just look at the ones he suggests. Bonds (he actually means bond mutual funds, which unfortunately means you don’t own any bonds at all), stock mutual funds (is there an echo in here?), and dividend-paying stocks in tax-deferred retirement savings accounts while holding individual stocks in brokerage accounts. The problem with all of these is that they can lose value! Does Schulte remember 2000? Does he remember 2008 and the Great Recession? Does he remember the many smaller corrections since then?

Those terrible losses are exactly what spurred the creation and implementation of Preventative Wealth Care. We took strategies that had historically been on platforms for the ultra-rich and institutions, and brought them to the retail-level investor. We were sick and tired of people we cared about losing their life savings over and again. If you are tired of losses and the same cookie-cutter approach everywhere you go, contact one of our Preventative Wealth Care specialists today. They will teach you how to invest in the 21st Century.


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