MINISODE: Hurricane Hiatus - An Update on the Wealth by Design Podcast
Wealth by Design
Hello, loyal listeners! We wanted to let you know that we have a quick update on the podcast and a few things that are happening over at Toujours Planning right now. As you may know, we are a Lake Charles-based business and family, and our community, homes, and offices were devastated by Hurricane Laura in August.
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MINISODE: Do You Need a Financial Advisor or a Certified Financial Planner™?
Wealth by Design
Do you need a financial planner? A financial advisor? An investment professional? A money coach? And what are those initials after their names?!
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MINISODE: Are You Falling into This Stock Market Trap?
Wealth by Design
In this minisode, Dustin breaks down the Sir Templeton’s quote: “Bull markets are born on pessimism, grown on skepticism, mature on optimism, and die on euphoria.”. He also discusses timing the stock market, why it’s a bad idea, and what you should do instead.
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MINISODE: Should You Have a Joint Account with Your Partner?
Wealth by Design
We’ll keep the intrigue to a minimum. In our opinion, the answer to this question is a resounding yes. Sharing your finances with your partner builds trust. Keeping them separate can breed suspicion and worry.
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MINISODE: When Stock Markets Dip and Bounce Back
Wealth by Design
In this minisode, Dustin recaps what a stock actually is and how stocks are bought and sold. He discusses how people’s emotions cause those peaks and valleys in the stock market, and how you can avoid that dangerous herd mentality when it comes to your own investing.
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112: Growing a Business & Wealth with Katell and Jon of Reverielane
Wealth by Design
Katell and Jon, a husband and wife design team, are founders of Reverielane, a purpose-driven brand and web design firm.
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[Summer Remix] 102: Net Worth is King
Wealth by Design
We talk about fear a lot on our podcast. Fear is natural and, TBH, necessary. But fear can also make you focus on the wrong thing when it comes to your net worth. Paying down debt rather than building up your assets, to be specific. And that’s what we discuss in this week’s episode: where our fear of the “debt boogeyman” comes from, our three-step strategy on how to overcome it, and what part of your finances you should be focusing on instead.
info_outline![[Summer Remix] 101: Robo-advisors: Your New Best Friend or Your Worst Enemy? show art](https://assets.libsyn.com/content/78672425?height=50&width=50)
[Summer Remix] 101: Robo-advisors: Your New Best Friend or Your Worst Enemy?
Wealth by Design
The robots have taken over. Just kidding. But, they have taken over a major chunk of the financial industry in the form of robo-advisors. But the truth is, we think robo-advisors are actually pretty useful. Of course, there’s a time and a place to use them, which is exactly what we cover in this episode of Wealth by Design.
info_outline![[Summer Remix] 100: High Yield Savings vs. Stocks: Who Wins? show art](https://assets.libsyn.com/content/78184535?height=50&width=50)
[Summer Remix] 100: High Yield Savings vs. Stocks: Who Wins?
Wealth by Design
There are a lot of misconceptions about investing in the stock market, thanks to fear-mongering in the news, horror stories from family and friends, and a lack of education about the stock market in general. Your fears may also be why high yield savings seems like the better option for your money. In this episode, we talked about the differences between high yield savings and stocks. We know you’re probably a big fan of saving because it’s “safe,” right? Well, we’re about to rock your world.
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[Summer Remix] 98: Leaving Behind the “Punch Clock” Mindset
Wealth by Design
The concept of a punch clock — punching in to start a shift and punching out when it ends — is ingrained in many of us, even as business owners who write our own checks and make our own schedules. But it doesn’t have to stay that way! On this episode of Wealth By Design, we talk about how you can start changing your mindset and your life right now.
info_outlineThe most liquid asset is cash, but what about other assets? And what does liquidity mean? On the Worth It podcast, we dive deep on what liquidity is (and is not) and what it can do for your finances.
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Which is easier to drink when you’re thirsty: a block of ice or cold water straight from the tap? The tap water, right? It makes sense in this context, but many people — especially business owners — have a hard time understanding how this applies to their assets.
Liquid assets are the kind of assets that are easy to buy and sell without affecting the asset’s price. This means that you, whether as an individual or as a business, can easily liquidate (sell) assets without worrying about delays in time or decreases in value. Think of the difference between selling some stock and selling a house; the stock has a very clear value assigned to it and you can sell it in a matter of minutes, while a house can take weeks to be valued, put under contract, and finally sold.
In this week’s episode of Worth It, Dustin and Danielle are talking all about liquidity and why your business needs it to operate properly.
WHAT YOU’LL LEARN
01:04 The definition of liquidity
01:25 Why liquid assets are easy to buy and sell
03:15 Why real estate non-liquidity was one of the main causes of the financial crisis
06:20 How flipping houses are just real estate speculation (and not liquid at all)
10:16 Why business owners especially need liquid assets
10:46 The negative results of illiquid assets in a business
11:50 The tendency to look at illiquid assets as “superior”
15:25 Why real estate may not be the best asset option (price drops)
16:43 People are always willing to take your money
18:12 How giving back and investing in others doesn’t necessarily mean great ROI
20:13 Private equity and real estate investments aren’t always in your best interest
21:45 X ways to become liquid
22:12 The difference between liquidity and speculation in your asset classes
23:02 How investing in public investments with a financial advisor can up your liquidity
THE PROBLEM WITH ILLIQUID ASSETS
As Dustin and Danielle explain in this week’s episode, liquidity is kind of a big deal. One of the biggest reasons that the recession in 2008 hit so hard is the “illiquidity” (lack of liquidity) of real estate. The bubble burst and housing prices tanked; people didn’t know the value of their house and they couldn’t get a buyer. They either ended up being underwater (owing more than the house was worth) or they lost money on the sale of their house. If they didn’t have enough liquid assets — like cash — their net worth was essentially wiped out.
Unfortunately, many people seem to have a short memory when it comes to the real estate and economic crisis of 2008.
More and more, people are choosing to invest in assets like real estate and other businesses to try and grow their wealth. But what many people may not realize is that these purchases are illiquid — they can’t be bought or sold quickly, and the value of these investments can change from day to day.
As Dustin and Danielle explain, it’s easy to see illiquid assets as more valuable than liquid assets because you can see them, touch them, use them, etc. It’s hard to touch money or liquid assets because they’re often in funds, ready to be bought or sold. However, it’s hard to buy and sell illiquid assets, and it’s also harder to know the value of them. Back to the crash of 2008; people often assumed their house was worth the same value as before, and they were taken by surprise when it came time to sell.
You don’t want the same to happen with your personal or business finances, which is why it’s important to focus on building liquid assets to counteract illiquid ones (after all, the majority of assets are illiquid, especially if you’re a business). To do this, you’ll need to know what really qualifies as a liquid asset.
KNOWING THE DIFFERENCE BETWEEN LIQUID ASSETS AND SPECULATIVE ASSETS
When you have investable assets (money you want to invest) set aside, it can be tempting to consider real estate, tech, business, or other investment pitches that come your way. But real estate and private equity investments aren’t liquid assets — they’re speculative. Essentially, a speculative asset has a lot of risk involved in it, but it can also gain a lot of money. Think of fixing and flipping houses; that may seem like a liquid asset because you can sell the house as soon as you’re done fixing it up. But the value of the house is not guaranteed — and you can’t sell the asset as quickly as you’d think.
The same goes for other assets, such as private equity investments in startups or product inventions. Essentially, if there’s a risk that you could lose all your money before you’re able to cash out, it’s a speculative investment rather than a liquid one. In the episode, Dustin and Danielle discuss why these different investments may not be the best option, especially if you’re trying to up your liquid asset levels. They also talk about why investing in the stock market is one of the best ways to up your liquidity.
THE STOCK MARKET ISN’T SUPPOSED TO BE SCARY
The stock market is composed of some of the most successful businesses in the world. Rather than investing in a single business with a high level of risk, or focusing on building a “fix-n-flip” real estate portfolio, why not look into the stock market? An investment portfolio will mix up a portfolio of stocks in a number of these businesses and will help you grow your liquid asset portfolios. A liquid portfolio can be easily sold in a matter of days to get you flush with cash, or you can keep letting these assets grow so that you have what you need to get kids through college, create your work-optional lifestyle, or weather a tragedy.
Investing in the stock market is less cost, less stress, and less overall risk than other investments or illiquid assets. It gives you peace of mind too, knowing that you’ll have a liquid portfolio that can provide financial support in just a couple days. The best part? You can still start investing in these liquid portfolios without an advisor. There are a lot of great resources or you can even start an account online with any online investment firm.
If you are interested in working with a financial planner who can help you understand how much you need in liquid assets and which investments you should consider, contact Toujours Planning. You take the quiz to see if you’d be a good fit!
This material is for general information only and is not intended to provide specific advice or recommendations for any individual.
RESOURCES & PEOPLE MENTIONED
- Net Worth Worksheet inside our Resource Vault
- Investopedia: Liquidity
- Investopedia: Speculation
- The Toujours Planning Quiz — are we a good fit for your financial planning needs?