#10 The High Cost of Liquidity The Dangers of Overemphasis on Liquid Assets and How to Better Manage
Channel: Brian Godfrey - Key Retirement Solutions
Date: 2023-07-25

In this video, we delve into the often-overlooked concept of liquidity – the ease of access to your assets or cash. While most of us appreciate the comfort of having liquid cash for emergencies, too much liquidity can actually cost you in terms of potential returns on your investments.

We begin by introducing the concept of liquidity, its importance in financial planning, and the balance of risk and reward in investments. Why does too much liquidity pose a problem? And how can you ensure you strike the right balance between liquidity and growth potential?

To illustrate this, we introduce you to Bob and Jane, a financially conservative couple nearing retirement. They have set aside 20% of their savings as liquid cash in a savings account, a sum significantly higher than what most experts recommend. The couple enjoys the peace of mind this liquidity provides, but is it actually harming their long-term financial health?

We delve into the high cost of liquidity by showing you how the substantial amount of money Bob and Jane have set aside in low-yielding accounts could have grown if invested properly. The video explores three different return scenarios - 3%, 5%, and 8% - over 10, 20, and 30 years. The result? Even a small difference in interest rates can lead to a substantial difference when compounded over a long period.

The video concludes by emphasizing the potential risks associated with too much liquidity and how to optimize your liquid savings. We explore potential options that strike a balance between having emergency funds and ensuring your money is working for you.

Subscribe and hit the notification bell to stay updated with the latest videos. 

Comment with any questions or topics you'd like me to cover in our upcoming videos.

#RetirementPlanning #Annuities #FinancialSecurity #MarketVolatility #RetirementIncome #FixedIndexAnnuity #FinancialPlanning #InvestmentStrategies