Core Asset Conservation
Stay in Control of Your Future:
Conserve Core Financial Assets
Core Financial Assets are the most essential, important and valuable building blocks for an entity or individual. With their destruction or waste, the entity ceases to exist and the individual will be left struggling to survive.
Living Core Assets
Living Core Assets are defined as life-accumulated financial assets -- irreplaceable from the standpoint of time -- that you depend on to maintain and support your attained lifestyle or a planned lifestyle change, as well as provide for the important milestones in life such as future college tuition or guaranteed retirement income that you cannot outlive.
We recommend that these assets be positioned for secure and sustainable growth within time frames appropriate to their various needs, and that they have adequate liquidity to protect illiquid, fixed core assets like real estate in the event there is an unexpected interruption in regular income and your immediate cash reserves are insufficient to meet the demands of the situation. The requirements of your Living Core Assets are not static and will change according to age, financial and life circumstances as they evolve.
Legacy Core Assets
In addition to any fixed core assets, Legacy Core Assets are the amount of guaranteed funds that would be immediately available in your absence or incapacity to secure the lifestyle needs of family members or any heirs. Establishing a Family Security Plan will, among other things, help to eliminate unnecessary tax consumption as well as multiply the financial benefits you are able to provide for your heirs. In an environment where the rules are changing, having a comprehensive financial plan in place will reduce the stress levels that come with the natural transitions of life.
Financial Conservation Standard
- Living and Legacy Core Assets are placed with major insurance companies that have top, verifiable ratings due to long-standing track records of stability and fiscal responsibility.
- Any specific financial vehicle chosen would be required to provide the following guarantees: Safety of Principal, Liquidity and Locked-In Gains.
- Maximum Tax Efficiency and the ability to Stay Ahead of Inflation will always be key considerations.
- In order to help manage and preserve your Living and Legacy Core Assets properly, we are always available for consultation and conduct yearly reviews with our clients to stay on top of any events that would require our assistance.
The Aircraft Carriers
One advantage of the financial crisis was that it tested the strength and management effectiveness of our largest and most important financial institutions. It allowed us to clearly see which ones had been operating with the type of steady and reliable business practices that any economy ultimately depends on -- particularly when the bad times arrive.
It is important to note that the body of the insurance industry regulated at the state level proved once again its dependable sea worthiness in the face of a major ‘financial hurricane” that hit with a force of impact affecting everyone. Known for its consistently high standards of self-governance, the state-regulated insurance industry offers a wide variety of financial products that meet the safety standards and long-term requirements of Financial Conservation.
Surfing Market Wave Patterns & The Dynamics of Compound Loss
No coin has only one side. Like up cycles, down cycles are an inevitable part of the financial markets and the economies they are supposed to reflect. The Financial Crisis was in large part brought on by a head-rattling, mind-numbing lack of forward-thinking and priority given to providing reliable safeguards that would automatically kick in and protect Core Financial Assets when the market coin flipped heavily to the negative side.
When, not if. It has never been nor will it ever be a question of if the down cycles will arrive, only a question of when. And, as we have learned the hard way, the timing is unknown until it happens. Once a down cycle starts, and losses are being incurred, how do you put the toothpaste back in the tube? You can't, it's too late. Time to ride the waves.
Surf's up! There are two main moving parts to the dynamic of recovering from any losses experienced in the financial markets. First, take another look at the S&P 500 Chart over a 50 year period. You can see how the market moves in a fluctuating wave pattern. Bearing in mind that legs are strongest in the first phase of a foot race (to mix metaphors), if you have experienced any losses in a down cycle, the first and strongest phase of a subsequent market recovery or up cycle, by definition, is not devoted to real asset growth, but to the recovery or retracement of those previous losses.
The math of compound loss. The second moving part of recovering from market drops is how the math is not working in your favor. For example, just to get back to breakeven from a loss of say 50% would require a recovery gain of 100%.
Locked-in losses. Keep in mind that when financial or psychological pressure builds up during a down cycle -- which is particularly true when it comes to core financial assets -- and the order to sell goes through, any losses incurred become permanent and the producing asset is gone forever.
The only timing that matters: will it be there when you need it? Recovering from market losses that impact Living & Legacy Core Financial Assets that you rely on for the major milestones in life -- built over a long period of time -- can be a very slow moving and deceptively long process that can seriously disrupt your life plans. Once in this position, you have no control over the timing of market recovery that will determine whether or not your asset value has been restored -- if ever -- by the time it is needed. And to eventually recover in financial terms is one thing, but how do you ever recover the time it took to build these assets?
Step Structure of Financial Conservation
The Steps are key points in establishing a reliable financial structure to maintain the sustainable growth and preservation of Living & Legacy Core Assets. With guaranteed Safety of Principal and Locked-in Gains providing an automatic defense system against the dynamics of market loss, the time value of your most productive years is protected, and you have the financial security necessary to keep important life plans and responsibilities on track.
Stability for fixed and non-core assets. Knowing that your core financial assets are safe and have liquidity, puts you in a far stronger position -- financially and emotionally -- to ride out any market volatility or difficult financial times that could negatively impact your fixed or non-core asset investments. You have a margin of financial safety that will act as a buffer against being forced into the position of having to liquidate assets and lock-in losses -- at the wrong time.
Learn a crisis-tested strategy for establishing a Living & Legacy Core Asset based on the Step Structure of Financial Conservation
True Asset Allocation
From the perspective of Financial Conservation, true asset allocation begins by first distinguishing and then separating -- with a firewall of safety -- Living and Legacy Core Assets from other non-core financial assets.
Draw The Line Exercise Worksheet
Diversification of risks utilizing the well known asset allocation models has its place with non-core asset investments. However, risk is risk no matter how you slice it, and allocating risks or spreading your bets is not a legitimate substitute for actual up front guarantees of safety that will protect your future and keep you in step with the life cycle.
