What is Financial Security and How Can You Get It?

?? Learn: What is Financial Security and How Can You Get It?

Financial security is a state of having control over your financial future, encompassing control over assets, income, and taxes.?

It represents a shift from relying on unpredictable external factors to creating a stable financial foundation.?

This concept is particularly relevant today as 50% of Gen X does not feel financially secure, largely due to the decline in pensions and the cost of living today.?

Historically, pensions provided a guaranteed income in retirement, but the transition to market-dependent retirement savings plans has introduced significant uncertainty.?

Many now find themselves at the mercy of market fluctuations and potential tax increases, leading to a pervasive sense of financial insecurity.??

The red line below is 401k’s. The blue line is pensions.

Achieving financial security means building assets that offer predictable cash flow, like rental properties or businesses, developing multiple streams of income to mitigate risk, and incorporating tax-free assets to protect against future tax hikes.?

This approach moves away from conventional wisdom that often emphasizes investing in stocks and being vulnerable to market volatility and government tax policies.

Let’s look at a basic financial planning worksheet with needs, wants, dreams (luxuries):

Common sense tells us for our core needs, food, housing, utilities, etc, we want predictable steady streams of income. Assets that are more Defensive.

Wants, i.e. travel, fun, entertainment can be a mix of offense and defense.?

Dreams and luxuries would be for offensive assets.

Of course investing in the stock market is important and the market is great for accumulation and providing for those luxuries.??

But should something you have no control over be the foundation for your retirement? Your future financial security?

I think this is the primary reason you see 50% of GenX feeling not secure in their financial future as the graph above points out.

They are worried about ending up in what I call the “One Thing Retirement Plan”:

Instead, by focusing on what you can control, you can create a more stable and secure financial future.

Key Insights:

1. Control Assets: Build assets that provide predictable cash flow, like rental properties, businesses and secured income products.

2. Control Income: Develop multiple streams of income to mitigate risks.

3. Control Taxes: Incorporate tax-free assets to shield yourself from potential tax hikes.

This process also makes investing in the market much easier and much less emotional as you know your bases are covered.

Additional information on these topics from past issues of the newsletter here on LinkedIn:

Offense-Defense Framework: Use this strategy to balance growth and protection.

Build Predictable Cash Flow: Focus on assets that generate consistent income.

Tax-Free Assets: Protect your wealth from unexpected tax increases.?

?? Chart: The Rebalancing of the Global Supply Chain

One thing Covid did well was point out the risks in the global supply chain. A rebalancing of global supply chains is already underway. There will be significant shifts in the coming decade:

Most agree that rebalancing will result in higher costs in the short term.? This will certainly affect the FED and their goal to lower inflation. So this will drive up prices regardless of what the Fed does.

India, Mexico, and markets in SouthEast Asia, Emerging Europe and South America will occupy more prominent roles in value chains and trade. There could be some opportunities here in the Global Emerging Markets space.

This would fall under an “Offensive Strategy” from our framework above.

?? Productivity: Use Sensory Anchoring to Flip Your Productivity Switch

Try using specific scents or sounds to signal your brain that it's time to focus.?

For example, use a particular essential oil in a diffuser when it’s time to get work done. Peppermint, rosemary or lemon are good for this.

You can also try a specific music playlist that you only use during work hours. A study in the "Journal of Music Therapy" found that background music improved participants' performance on cognitive tasks. The type of music and individual preferences played a significant role in the effectiveness of the sensory anchor. So pick what you like.

Over time, your brain will associate these sensory inputs with productivity, making it easier to get into a focused state quickly.

?? Concept: ?What is Financial Planning?

If you would like to learn more about how you can build your own financial plan and learn how to start becoming financially unbreakable visit this page.

?? Resources:

?? Videos on Financial Education and Free Guides: https://bit.ly/ModernFamlyDynasty1

“5 Secret Strategies Millionaires Use To 5x Their Wealth & Immediately Cut Their Taxes By 50%” get instant access in the Wealth For Life LinkedIn Group?— https://www.dhirubhai.net/groups/5156642/

Want to brainstorm on financial topics? It’s great to have conversations!

Click here to schedule a chat via zoom: https://bit.ly/3JCGpCF

Thank you for?reading!