Why Estate Planning Is For Everyone, Especially The Less Wealthy You Are

Why Estate Planning Is For Everyone, Especially The Less Wealthy You Are

Category: Estates | Inheritances

Those who are least protected with fewer assets need to tackle their financial means more seriously. These are the people who cannot afford to wait.

On the other hand, those who spend hundreds of thousands on lawyers, accountants, services, consultants, fiduciaries, and supervisors don’t have nearly as much pressure yet still prioritize this seemingly boring practice of estate planning because they know they need to.

Good rule for life: If you can make anything fun, or at least attempt to make it enjoyable by being curious and proactive, then you will always succeed. It will also multiply your wealth. After all, the more we enjoy something, the better we are at it.

Taking on debt isn’t dangerous per se as long as you have a realistic purpose and mission for the future, ideally with what you borrow appreciates. Besides cutting expenses, working longer or raising money somehow, borrowing is one of the most efficient ways to build wealth, as long as it is responsible and moderate. With the recommended 20% downpayment on a home, there are very few cashed-up buyers, ~10% of Americans who don’t take on a mortgage and it may not be prudent always anyway if the purchase price is over 20% your net worth.

Without the option to refinance or take out a 30-year fixed rate mortgage when interest rates are at rock bottom, only a slim percentage of people would be able to afford a home and build equity inside of it.

The wealthy limit ‘toxic debt’ since they value their years of hard work, sweat, and tears. They know it’s easier to lose it than gain it back. They take on ‘healthy debt’ or leverage to capitalize on opportunities instead. Coincidentally, the top 10% and above also tend to hold the largest cash cushions, 6–12 months of living expenses even when there are negative interest rates to take advantage of unexpected buying opportunities and dips such as during the current geopolitical event when expensive speculative stocks are trading at a 50–80% discount.

Those swamped in debt that can’t get out of it took on excess debt to purchase toxic goods such as luxuries to impress others besides themselves. It’s more likely to regret a handbag purchase than a business loan. This has caused an imbalance to their FCF and asset allocation strategy, making it harder for them to dig themselves out of the hole they created. These people also tend to be the least financially literate and only pour their time and energy into 1 income source. Last but not least, it’s common to hear them say they never have the time. BTW, everyone has time for something. It’s your priorities that count.

Once you become financially independent, have several passive income streams and aren’t living on eggshells during a bull market, you not only become more serious about every penny you make and start to really pay attention to your spending like a hawk but your mindset is geared for the future. The present has already passed.

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See the original article here: https://medium.datadriveninvestor.com/why-estate-planning-is-for-everyone-especially-the-less-wealthy-you-are-fb3d577da181

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