The Parallel Paths
Everyone we meet has to be on two parallel paths.
The first path is the Protection Path and what I mean by that is protection from liability disability and death.
And that’s about the type, the amount, and the positioning of that protection.
The second path is the Wealth Accumulation Path and that’s about Capital. Capital for you long-term capital needs. Like funding a college education, buying a new home and most especially retirement.
And the reason why you have to do both is because of the way wealth grows over time.
You see when you put your first $15,000 into a 401(k) plan it didn’t suddenly become $1 million (or whatever seems appropriate given the context). It took time. You had to deposit money over time and get a return; so what we say is that wealth accumulation is most effective later.
You have to start it today. But the effect, the big impact of saving, happens later.
Now, you don’t own the curve.
You don’t have a right to have the curve.
There are all sorts of things that can interfere with having that curve.
What are some of those?
- Job Loss
- Disability
- Lawsuit
- Divorce
- Death
- Health
- Market Drops
You see the reason why we protect first is so that we assure ourselves of the probability of having that curve materialize with certainty.
And that’s why we protect. The Protection Path is protection against those things that would stop that curve from occurring.
Protection is necessary to assure the probability of that curve happening. That what all the empirical evidence shows us.
And if I could put all my clients in this room they would tell you that they would rather have a 100% probability of getting to 95% of their target wealth rather than the possibility of getting to 100% and the likelihood of getting significantly less maybe even less than 50%.
This is what we’ve learned after hundreds of thousands of man hours on tens of thousands of cases over the last 30 years.
The preceding is reproduced by permission from Vince D’Addona, The Parallel Paths, Copyright 2017 Prometheus Speaks, LLC.
My questions for you are:
1. What do you think of that?
2. Would you like to see where you fall on these paths?