The ABC Model of Investing
First, imagine all your investible assets are liquid and we could arrange them in any way you like. That includes all your CDs, money markets, annuities, stocks, bonds, mutual funds, REITs, or whatever. It would be everything except your real estate, all liquid with no strings attached. Next, let’s make a plan starting today. You will have to imagine your assets not where they are invested today, or last year, or even where they were  years ago. We’re not looking in the rear-view mirror, but trying to map out our future. This is vitally important, because you want to have your investments set up for your needs going forward, not left in accounts that might jeopardize your future. Of course, we realize not all of your assets are actually liquid and in a position to move to your ideal situation. This exercise will give you a glimpse of what you value in the types of assets in which you might invest and how to allocate them.

COLUMN A
CASH

TAXABLE OR TAX DEFERRED
LIQUID
BANK ASSETS
SHORT TERM


Column A are assets that historically earn a minimal amount of interest, are generally taxable, liquid and protected. These are your bank assets like CDs, checking and savings accounts. Think of the yellow column as your “short term needs” money.

COLUMN B
PROTECTED

TAX DEFERRED
MODERATELY LIQUID
LONG TERM



Column B are assets that have historically, over a 5 to 10 year period, have averaged 3% to 7% In returns.* They are tax-deferred, moderately Liquid and the principal is protected. Think of this as retirement planning assets for the long term.



Three GREEN Money Rules:
Rule #1: Protect Your Principle
Rule #2: Retain Your Gains
Rule #3: Guarantee Your Income

COLUMN C
GROWTH

TAXABLE OR TAX DEFERRED
STOCK OR BOND TYPE RISK
LIQUID OR MODERATELY
LIQUID
LONG TERM

Column C is the growth column and assets here rise and fall with the markets, it could go up 30+)% or down 30+)%. They can be in taxable accounts like brokerage accounts, trust accounts and joint accounts. Most of the Money in this column in America is in 401k’s and IRAs.


Three RED Money Rules:
Rule #1: Must be Tactical
Rule #2: Must be Liquid
Rule #3: Must be Long-Term