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| Strategies for Wealth Protection and Maximization |
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Cases: In all cases, the names have been changed, but the circumstances are real. Before and After Case: Brother Tom’s $30,000 Before: After wife passed away, Jenny’s father, Bob, gave Jenny and her brother, Tom, some money from their mother’s estate. Tom decides to put $30,000 aside and has Jenny saved for him in case of emergency needs. Because Jenny does not know when Tom will need the money back, thus, she has been keeping the $30,000 in the checking account, earning minimum interests. After taking care of Jenny’s own financial life planning needs, she wonders whether there is a better way of managing that $30,000 but it has to be available at any time when Tom wants the money back. After: Because Jenny is at her 50s and single, we transfer the $30,000 to a 3-in-1 policy, which gives the money about 5% interest earning; if Jenny needs someone to take care of her when she is no longer able to take care of her own daily activities, the policy will pay her about $90,000 and above to hire someone take care of her; if she dies, Brother Tom will receive much more than $30,000 from the policy. Most importantly, Jenny can have the $30,000 available at any time when Brother Tom wants the money. A proper planning makes Brother Tom’s $30,000 available to Tom at any time but also gives Jenny more benefits which were not there before. Case: Eric and Cindy’s mortgage pay-off plan Before: Eric and Cindy are young married couple. They work hard and save money regularly. They recently bought a house and put down a good amount of down payment. They want to pay off their mortgage as soon as possible to own the house free. According to their own payment schedule, they can pay off their house in 7 years by making prepayment every month of $3300. However, they wonder whether making the prepayment is a wise decision because they won’t have much money left after the prepayment of $3300 every month. After: Eric and Cindy are amazingly good at saving money. They are disciplined and know to seek for professional help at the very beginning of their financial life. Because Eric and Cindy just started their marriage life and don’t have proper family financial plan in place yet, the house is vulnerable if something happens, such as unemployment, disability and death, etc. By redirecting the $3300, Eric and Cindy now have a plan in place which serves as a liquid emergency fund, with death benefits to pay off the mortgage if premature death occurs, and a self-complete retirement fund if disability strikes. The good news is they can still pay off their mortgage balance in 7 years as they wish. The same $3300 now gives them a complete peace of mind of owning their first house.
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