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    Keep It Simple, Make It Big: Money Management for a Meaningful Life
    Keep It Simple, Make It Big: Money Management for a Meaningful Life
    Keep It Simple, Make It Big: Money Management for a Meaningful Life
    Ebook191 pages3 hours

    Keep It Simple, Make It Big: Money Management for a Meaningful Life

    By Michael Lynch

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    About this ebook

    Has your personal finance plan become so complex, you can't even understand it?

    Who wouldn't be confused today? Investment pitchmen, mega-insurance companies, and even state and federal governments are vying for our money, making it more difficult than ever to manage it how we want.

    But simplifying your plan and reclaiming what's yours is easier than you think. In Keep It Simple, Make It Big, award-winning financial planner, Michael Lynch, uses his nearly twenty years of practical experience to help you create, protect, and enjoy financial success. You'll learn how to recognize and overcome common financial mistakes, from paying too much in taxes and falling victim to inflation, to blowing your investments and failing to protect what you cannot afford to lose. Michael's simple systems put you in the driver's seat to enjoy a lifetime of tax-efficient income, protect your family, and retire on your own terms. Ultimately, this book will help you cut through the BS and put you back in charge.
    LanguageEnglish
    PublisherBookBaby
    Release dateOct 27, 2020
    ISBN9781544515519
    Keep It Simple, Make It Big: Money Management for a Meaningful Life

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      Book preview

      Keep It Simple, Make It Big - Michael Lynch

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      Copyright © 2020 Michael Lynch

      All rights reserved.

      ISBN: 978-1-5445-1551-9

      ]>

      To Tasha Blount, who puts the B in Team LB, and Micaela and Domenic, who, with Tasha’s help, give me what I always wanted, a fun and happy home. To Mom and Dad, well, for everything.

      ]>

      Contents

      Disclaimer

      Introduction

      1. Vision and Values

      2. Bypassing the Roadblocks

      3. Creating Your Own Paycheck in Retirement

      4. Accumulate Those Assets: Where to Invest?

      5. You’ve Got Your Container—What Do You Put in It?

      6. Operation Asset Accumulation and Income Generation: Putting It All Together

      7. The Financial Engine That Can

      8. Risk Management

      9. Planning Your Final Estate

      10. Wrapping It Up

      Acknowledgments

      About the Author

      ]>

      Disclaimer

      This book is meant for educational purposes only. It’s not intended to be personal financial advice for the simple reason that all situations are unique, and it is not written for you personally.

      Michael Lynch is a registered representative of, and offers securities and investment advisory services through, MML Investors Services, LLC. Member SIPC. 6 Corporate Drive, Shelton, CT 06484

      Representatives do not provide tax and/or legal advice. Any discussion of taxes is for general informational purposes only, does not purport to be complete or cover every situation, and should not be construed as legal, tax, or accounting advice. Clients should confer with their qualified legal, tax, and accounting advisors as appropriate.

      All opinions expressed in this book are solely my opinions and do not reflect the opinions of my respective parent companies or affiliates or the companies with which I am affiliated.

      Investments or strategies mentioned in this book may not be suitable for you, and you should make your own independent decision regarding them. This material does not take into account your particular investment objectives, financial situation, or needs and is not intended as recommendations appropriate for you. You should strongly consider seeking advice from your own investment adviser.

      ]>

      Introduction

      This book was originally conceived of and designed to be a college-level introductory course to the exciting and complex field of personal financial management. Those looking for off-the-shelf answers to seemingly simple questions—What is the best way to save for retirement? Should I buy stocks or bonds? What mutual funds are the best? Should I buy term life insurance and invest the difference, or do I need permanent life insurance? Are variable annuities the best thing since air conditioning or the Devil’s handiwork—won’t find them here.

      The answers to these questions are unique to each person. This book provides the framework, tools, and self-confidence to begin to answer these questions for yourself.

      In some cases, the questions will be simple enough that this is all that’s needed. In others, a person will gain enough knowledge to understand that professional help is needed. Most importantly, this book will equip you with a base of knowledge to ask the right questions and choose a course of action in an informed manner. As Socrates taught, asking the right question is the most important step to true knowledge. (He also taught that there’s a time to quit asking, but that’s another story.)

      Although informed by the latest academic work, as well as insights from Aristotle to Yogi Berra, this work emerges from nearly two decades of financial planning experience with hundreds of American households—households ranging in income from under $30,000 annually to more than $3 million. This extensive experience taught me that there is no one right way for everyone to achieve financial success. There is a way for everyone to develop a plan that’s right for them.

      This book will empower you to design and implement strategies necessary for financial success as defined by enjoying a retirement free of financial worry, educating children and grandchildren, and making sure that no matter what life throws in your direction, you and the people you care about are never poor.

      Michael Lynch CFP®

      ]>

      Chapter One

      1. Vision and Values

      What does money mean to you? It’s an important question, yet one that few people ask themselves. It’s the first question I ask participants in a retirement-oriented class I teach. I’ve been helping people build, protect, use, and transfer wealth for nearly twenty years. I know that there are many answers and that each answer has important implications for how one designs a financial plan, an approach to life, and ultimately financial independence. Here are some common answers and approaches, although some may not be readily admitted.

      Freedom

      Security

      Time with family

      Power

      Control

      Each of these is legitimate and each of them will lead to a slightly different approach to work, leisure, investing, and protecting wealth. A person who values freedom, for example, may place a premium on the spending side of financial life, keep a close eye on expenses, and invest a high proportion of after-tax income. This enables them to quit a job temporarily or even permanently, and not get boxed into bad situations. This is quite popular these days as the Financial Independence Retire Early (FIRE) movement demonstrates. How they invest their savings will depend on their overall risk preferences and ability to tolerate the downs of ownership investments. But they better have a plan to stay independent and therefore free.

      A person who values the power that money provides—and it can provide a lot—will have a different relationship to work, spending, and investing. For most, work is the source of at least some power and plenty of income that facilitates spending, which itself provides both real and perceived power. Someone who values the power of money will likely work longer, save and invest much less, and consume a higher portion of income. These choices will drive a need to work longer to support the lifestyle. How this person saves and invests will again be driven by many factors, but the need for consumption will require a commensurate need for near-term liquidity to pay the bills.

      The second question I often ask is simple:

      What is your ideal retirement?

      This question often elicits some blank stares, so I follow it up with specifics that assist people in moving through their checklists.

      Where are you living?

      Your current home

      Condo in Florida

      Trailer in Mexico

      Hacienda in Spain

      House in California

      Apartment in Greenwich Village

      What are you doing?

      Working at Walmart

      Volunteering at church, temple, or synagogue

      Tending your garden

      Surfing in San Diego

      Taking care of grandchildren

      Traveling the country in a motor coach

      Where is your money coming from?

      Social Security

      Employer-sponsored pension

      IRA

      Tax-deferred annuity

      Personal investments

      Part-time income

      Children

      This last bullet produces laughter and rolling eyes. I know this as I have been one of those children who at times caused the money to move in the wrong direction—from parent to child.

      Setting aside us deadbeat children for a moment, these big questions are exactly what this book is designed to assist you in fleshing out. It won’t provide you the answers, but it will allow you to frame the questions in ways that are meaningful to you and your loved ones and provide your own answers. For areas where you feel you need professional help, it will educate you to be an informed consumer of financial services and perhaps even a great client for some lucky advisor.

      This book is retirement oriented. All things must have a focus, so retirement it is. That said, many of the discussions will apply to life’s other great financial goals and stages—accumulating for education for children, for example. From cover to cover, this book will help you:

      Begin the process of dreaming the big dreams required to define your retirement goals

      Understand the resources you will need to accumulate to realize your dreams

      Help you amass more resources by paying less in taxes

      Develop a robust system to turn accumulated assets into useful income

      Manage life’s risks so that you drastically reduce your chances of being poor or dependent on your children or the government

      Transfer your assets to your children, not to Congress and the state legislatures

      Put it all together in a plan for your future—which, after all, starts today

      Simple Steps to Make It Big

      Set aside time with your spouse, loved ones, or just yourself to brainstorm your future.

      Bring yellow pads and ask yourself and each other the questions in this chapter.

      Don’t prejudge. Big goals motivate. Don’t ask, Why? Ask, Why not?

      ]>

      Chapter Two

      2. Bypassing the Roadblocks

      Begin at the beginning and go on ’til you come to the end; then stop.

      —Lewis Carroll

      This is not your grandparents’ retirement.

      It promises to last far longer. A baby boy born in 1935, the year Social Security was founded, could expect to live sixty years, seven short of the time needed to collect a check. A baby girl was expected to survive until 64.1 Back then, Social Security really did address the risk of living a long life.

      A baby boy born in 2015 can expect to live until 78. A baby girl is projected to reach 81.2 Today, if a couple both reach 65, one person can expect to live until age 93. There’s a one in four chance that one will live until 97.3

      This couple, if both call it quits at 65, needs a plan to generate real, inflation-adjusted income for thirty years!

      Longevity is the reality we all face. On balance, this is a good thing, of course, but all silver linings have clouds. I recall my grandfather’s quip, If I knew I was going to live so long, I would have taken better care of myself.

      The question you must ask: Am I prepared to finance a thirty-year retirement? How much should I take care of my finances to make these years financially healthy?

      Shockingly, many don’t think they need to take such care. Nearly one in two Americans expects to be retired for fewer than twenty years. Sixteen percent expect to live less than fifteen years after saying goodbye to paid employment.4 A recent survey found that more than half of respondents had no idea how long they’d live. This is the most accurate response.5 It also dives directly to the

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