You will recall that I recently shared with you what is inside your bucket. Why that is important and what you need to think about moving forward.
So, this time we are going to focus on what’s outside of your bucket…
In essence, everything that you can’t immediately turn into cash belongs in this category. To use a rather clumsy financial term – illiquid assets.
What might immediately spring to mind are the more tangible possessions such as paintings and artwork and jewellery. If you happen to own a boat, a vintage car or a racehorse these would fit in that category too.
Whilst you might be able to touch and feel all of those things, you can’t actually spend them, until they have been sold and you have the money in the bank.
But actually, that logic applies to everything else that is outside your budget too.
If you have buy to let properties or a commercial property you will earn an income for the rental, which, because it is available to you immediately, is already in your bucket. However, if you need to make a large purchase or need a larger sum of money, you would need to sell the property before you could realise the funds.
Why is this important?
Because you need to make decisions about what you want your life to look like at various points in your lifetime, to know when you might need to sell assets.
Equally, if you can afford to take a dip now, because you are investing for the longer term. For example, at the moment, commercial property comes into that category – even though we know it will bounce back eventually. So, can you ride that wave, because you don’t need the money right now, or will you have to take the hit, because the funds are required?
Your own home falls into this category too.
Only you will know if you wish to stay in your existing home into retirement, or if you would prefer to downsize. Thinking that your home is going to provide your pension can be a risky assumption – not because of property prices, although that does play a part, but more because of your needs and those of your loved ones.
And that brings me neatly onto inheritance.
You cannot rely on money you believe you are going to inherit one day to provide for your future. Aside from the fact that your relatives could decide to change their Will at any time, they may need to sell their property or assets to provide for long term care needs. As you probably know, residential care is incredibly expensive, so your inheritance could soon disappear.
We have also talked before about what to consider if you are a business owner, and the steps you should put into place now to protect your business. I also recommend talking to your accountant about the most tax efficient ways of ensuring you are making the most of any allowances, and when is the right time to realise funds or assets from the business.
It’s important to remember that I want you to live your best life now, not just prepare for “one day”. Yes, I would like you to have a long, healthy and enjoyable retirement doing all the things you want to do.
But I also want you to be able to do the things you want to do now.
Rather than hoping to be able to afford to take that once in a lifetime holiday at some point in your life, supposing you could do that sooner rather than later? And imagine doing that with the good health and energy you have right now – laying down some fantastic memories to recall later.
So, rather than saving all of your money for one day, and keeping all of those things outside of your bucket, what about exchanging some of that for some high quality return on life right now?
Let’s have a chat about what that might look like for you – 01344 875 310.