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The fourth quarter is where games can be made.
Welcome to part four of this four-part journey. For those of you who have stuck around, thank you. Those of us who are football fans, know the fourth quarter is where games can be made. Before I get into it, I want to share a little-known sports stat. In 5th grade, I went undefeated in P.E. capture-the-flag. It’s possibly important to note that 5th grade was the year I went from 5’7” to 5’10” and had the benefit of moving like a kid who spent his formative years running full speed through the woods with friends and swinging at top-speed across rivers on Georgia kudzu vines.
I mention capture-the-flag because I was big, fast and agile. It’d make sense to send me out into the field to go get the opponents’ flags, right? However, at the beginning of the school year, when we were learning how to play the game, it became really obvious that when I was put in charge of defending the flag, no one was able to come close to taking it from me. This athletic dominance among my peers wouldn’t last forever, but 5th grade was special.
Our P.E. coach then naturally suggested I play defense for the rest of the year. I didn’t want to, but I did want to win. So, I listened. I played defense the rest of that year, and through ups and downs, I knew that by not giving up any points, whatever team I was on would win.
Here, we find the most critical truth about the new money rules with which we all must contend. As the rules and the market shift, having strategies that protect us from the threats to our game plan can make all the difference between arriving in a future you want or one in which you must learn to survive.
Simply put, these threats are taxes, opportunity cost and market volatility. Taxes represent the biggest cost, and therefore risk, we all face. Opportunity cost is when we have money in places that don’t work for us when we could instead have our money earning money, and market volatility is the chance of losing money we’ve invested.
Last week, we covered some savings strategies and how they’re taxed. In previous weeks, we’ve covered the instability of social security and how the disappearance of pensions has created greater need for financial literacy than ever before in a time when there are still far too few voices in the market ringing that bell with any urgency and 70% of the developed world still can’t answer basic questions about money.
This week, we’re going to drive across the goal line, by going over some steps you can take to create a defensive strategy that makes every offensive point you put on the board more certain to move you forward into the life you want. Part of that is accomplished by leveraging tax-advantaged savings, instead of just the taxable and tax-deferred option we covered last week.
Tax-advantaged savings are after-tax dollars that grow tax deferred and come out tax exempt, so no matter what the tax environment of tomorrow becomes, that money meant to provide for your future is protected from tax threat. There are only two ways to truly accomplish tax-advantaged savings in America, and we have reason to believe we all need to leverage both. The rest of that defense lives in these steps.
1. Learn How Money Works.
This one’s simple by doing one of two things. Go buy the most comprehensive, easy-to-read, enjoyable finance book on the market. It’s called “How Money Works: Don’t be a Sucker” and is endorsed by Heartland Institute of Financial Education, takes about an hour to read and costs $17. You could also reach out to me or slide into my DMs on any of my social channels and request a copy. I’ll send it to you as a 100% free gift just because I believe that it can help you. Option two is to hit me up and get an invite to the online workshop version of the same material. The knowledge in this book will give you some clarity that can enable you to move toward your goals.
2. Clarify your goals.
Once the fear of not knowing how to save, grow and protect your money has left your system, you will likely feel free to dream again. I encourage you to do so with specificity. Plans that have compelling reasons behind them and the right tools in them have a funny way of getting done.
3. Build a Personal Financial Strategy
Your personal financial strategy is a map you create with a financial professional to go from here to your goals. This strategy gives you a playbook that creates a consistently productive offense with the horsepower to overcome any current deficits by also building an impregnable defensive strategy that empowers you to point to a date on the calendar when your story changed.Under that date, it will read, “from this day forward, we were undefeated!”
Kelechukwu “Chu” Oparah is a Licensed Financial Professional Serving your Dayton Community. For more content, Chu is on Instagram @chuoparah.