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Planning is about both goals and obstacles!

October 08, 2015

As Benjamin Franklin once said, “If you fail to plan, you are planning to fail.” Financial planning does not only include formalizing goals and having a growth or savings approach to fund the goals. Great planning has to have a strategy in place to navigate through any potential obstacles. There are a number of obstacles that have implications to any future goal. That is, irrespective of planning for retirement, planning for future college funding, etc., these obstacles should be part of any planning strategy.

One obstacle is taxes! There will always be economic (and political) arguments for and against currently scheduled tax rates and opinions about where tax rates may be heading. Nonetheless, planning that does not account for tax and tax trends may result in some difficulties in achieving a funding goal for a particular planned event in the future. Today, tax planning is big business; but sadly many of these tactics may actually cause future issues in rising tax environments.

Inflation is another obstacle that should be considered. Inflation for planning purposes is not as simple as tracking the consumer price index (CPI). CPI is generally best used as a measure of adjusting payments for a market basket of goods and services in the future, based on a price today. However, it doesn’t really account for product wear and tear, i.e. replacement cost. Nor does it account for technological obsolescence caused by very rapid technology advancements. And potentially, an additional factor that one needs to account for is the increasing standard of living caused by economic prosperity.

A third obstacle is potential liability. We live in a fairly litigious environment. It is important to consider that hard earned and growing assets earmarked for future life events might be jeopardized by potential lawsuits and creditor issues. Sound planning integrates layers of protection to insulate assets as best as possible.

As we have seen during trying economic times, such as the dot-com bust fifteen years ago or the recent subprime mortgage debacle seven years ago, there are periodic economic recessions. This has the potential for income disruption in the form of a job loss. Both short term and long term funding goals would be jeopardized without a suitable plan. Such plans do not just include adequate savings, but also an investment in one’s own career-growth.

Along the same vein, a preponderance towards chasing higher returns could result in significant portfolio losses due to market corrections. Investing is a double edged sword! While there is the potential for higher returns that allows a target to be reached earlier, there is also the potential for steeper losses, pushing the target out of reach. In essence, the savings rate towards a future goal is actually more important than the rate of return.

Finally, health considerations should of course be part of any planning. A potential long term disability due to injury or illness, or the death of the primary bread winner could be catastrophic economically.

In summary, while it is important to list out future goals and how to fund for these, a complete action plan should also have the ability to weather any obstacle that life might throw at you. To learn more about financial strategies and services, please contact Ashvin Chheda at> or 214-334-5656.

Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representative of The Guardian Life Insurance Company of America® (Guardian), New York, NY. PAS is an indirect, wholly-owned subsidiary of Guardian. Opes One Advisors is not an affiliate or subsidiary of PAS or Guardian. Opes One Advisors is not a registered investment advisor.

This material contains the current opinions of Ashvin Chheda but not necessarily those of Guardian or its subsidiaries and such opinions are subject to change without notice.

Material discussed is meant for general informational purposes only and is not to be construed as tax, legal, or investment advice. Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon only when coordinated with individual professional advice.

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