The “Colors of Money” is a way of assigning colors to money to help visualize the risk your assets are exposed to, as well as a method of seeing the balance of risk to safety within your portfolio. Money comes in three colors: Green Money, Yellow Money, and Red Money. Green Money is the safe stuff with no volatility, but it is also the kind of money that offers the least growth. When we talk about having peace about your financial decisions a big part of that is knowing that you will always have enough money to meet your needs. That’s where Green Money comes in.
On the other hand, when you think about red, what comes to mind? Volatility, right? Risk. You could make a 20% increase one month, and by next year you could lose half your savings. People who had all of their assets in Red Money in 2008 learned that rule the hard way. Some of them lost as much as 50% of their savings. Brokers will tell you “the market will always com back,” and that is generally true. But when you are retired, you don’t have time to wait for the market to come back, and you don’t have a paycheck to keep paying the bills in the meantime.
That doesn’t mean that your portfolio cannot have any growth. That is why there is a third kind of money, called Yellow Money. Yellow Money is Red Money with some of the volatility taken out of it. It is money that has been put into managed assets, holdings that are being carefully monitored and handled by a professional and include safety measures, which means that the risk goes down a bit. You don’t want your grocery and mortgage money to be Yellow Money, but if you have assets that you don’t need for 10 years, it would be something to consider.
What does all this mean? As you approach retirement and in retirement, you want the portion of your assets that you need to maintain your standard of living to be positioned in Green Money. Then the rest of it should be positioned in Yellow Money to add inflation protection and crème to your standard of living.
Working with an Investment Advisor Representative means working with a professional who is legally obligated to help you make financial decisions that are in your best interest and fall within your comfort zone. You may have more money set aside for retirement than your neighbor, but they could end enjoying a better retirement lifestyle. Why? They had more than a good work ethic and a penchant for saving. They had a planful approach to retirement asset allocation.
What color is your money? If you would like to learn your color of money score, you can get started today by going to www.colorofmoneymatters.com/.
Call today 417-886-5724 to schedule a complimentary appointment with our Investment Advisor Representatives Joe LaTour and Jim Margraf to get a second opinion on your current strategies.
Retirement is too important for guesswork.