Broker Check

Are You Exposed to Any of These Risks?

Are You Exposed to Any of These Risks?

| February 26, 2019

Risk is everywhere, and we often think about the obvious – a life changing accident, a new regulation which alters our financial future… But what about the risks we don’t know that we don’t know?

#1…Putting a child on your bank account… Wise idea? Here are two good reasons why it may not be: The most common titling we see is adding a child to the bank account as” Joint with Rights of Survivorship.” This simply means that when one of the owners dies, the surviving owner is now the sole owner of the account regardless of what your will says. This may be an issue if you keep a significant amount in the account. You might have just disinherited your other children. “They can just give it to my other kids, right?” Well, kids don’t always do what you think they will, and even if they do, it could cause unnecessary taxes. Secondly, naming a joint owner on your bank account could have opened the door to each other’s liabilities. What if your child were to get sued? Or what if you run over someone? Thankfully, there are other approaches and it’s usually an easy fix.

#2…Cash is king. At least until it is no longer worth anything. In 1989, the average new car sold for about $12,000. 1. Today? Over $34,000 2. -  That’s a 183% increase. At more than 6% increase each year, it’s simple math to realize that if you had held onto your cash for just ten of those years you needed over 60% more cash to buy the car. Too often people hang onto their cash rather than letting their money work for them. Cash is safe, but not from inflation. It doesn’t mean you have to invest in stocks and you have options to keep it accessible and protected. Don’t go broke safely.

#3…I know I need to, but…We’ve all said this at one time or another. Years ago, a client phoned in and the first words out of his mouth were, “I messed up.” He told us that he had rear-ended a stalled car on the highway and consequently a little boy lost his legs. The gentleman was supposed to get a liability policy many months before and just hadn’t “found the time.” Almost the entire result of his life’s work was exposed. There is quote attributed to several sources, “Someday is not a day of the week.” I encourage you make those calls you know you need to make, calendarize the things you know you need to do, and start saving the money you know you need to save. We all worry about what is happening in Washington or the markets, but your own procrastination may be the biggest threat to your success.