Lazy Money

Success is defined in many ways, but I would say for someone to be successful, one of the traits that they have to have is a good work ethic. 

 

If they’re not committed and don’t have a good work ethic, no matter which way you define success, you’re probably not going to be successful. 

 

So how do you know if you’re successful financially? If you’re if your money is successful? 

I would say it has to have a good work ethic, but what we’re seeing is too often people have lazy money. 

 

It’s not getting any returns for them. It’s not doing anything for them. It’s just being lazy and it’s time to put your money to work to have the same work ethic to be doing as much for you as you did to get to the position of success where you are today. 

 

If you want to have successful investing, make sure you don’t have lazy money. 

 

Labor Day is coming up, a celebration of the social and economic achievements of American workers (and a day to rest from our labors!)

I am confident that you understand the value of hard work and how it has contributed to your success.

One of the key, fundamental values most successful Americans want to pass down to the next generation is work ethic.

We all probably have someone who taught us the value of hard work… parents, grandparents, aunts, uncles, coaches, friends… Who was it for you?

Laziness is not a lifestyle for the successful (however you define success).

I am sure you would agree that you don’t want your money to be lazy either, right?

In fact, you want your money to work as hard as you or, better yet, harder!

But many Americans today have lazy money not working at all!

With interest rates at such a low rate, money in traditional savings accounts is lazy money.

The “labor wages” (interest) the money in these accounts for a year may pay for a nice dinner (if you are lucky). 

But truthfully, after expenses (inflation and taxes), those accounts are actually losing money!

Lazy money equals losing money safety!

CD ALTERNATIVES

Now, I am not saying that you should have nothing in traditional savings accounts or CD’s, these are great tools for emergency money. (Side note: not having an emergency fund is another probability in our country and having an emergency account is an important lesson we should model and teach our kids.)

So having some money set aside for emergencies, even if it is not making a lot, is working money. That money is doing an important job for us by being available for unexpected emergencies.

However, having too much in those accounts making nothing is a problem. 

How much is too much? Well, that depends on your situation and cash flow needs. If you are planning on using the money within a year or so to buy a new house or take a trip, that justifies the amount. If not, then over 25-50k is probably too much money in “lazy” accounts.

FIXED ANNUITIES

What are your options?

Lazy money is yellow money, so green and red money is our working money.

What is best for you depends on your needs and goals, but here are some examples:

A fixed annuity (that functions much like a CD but is held at an insurance company is an option. Right now your lazy money can earn about 2% for 3 years or up to 3% for 5 years.

Indexed accounts are another option. This means that instead of guaranteeing a fixed rate, your returns will be linked to a major index like the S&P 500. 

If the index goes up, you receive a percentage* of the gains.

If the index goes down, you don’t lose, you just make zero for that period. 

The average returns in index products is about 3-6% per year with some years being more and some less.

With most index options, you are committing the money to be in the account for a period of time 5-10 years on average. However, most allow for some liquidity each year, usually about 7-10%. 

But there are also some index options with 100% liquidity!**

Physical gold and silver coins provide a great hedge against inflation.

A conservatively managed account can give you better returns and full liquidity with limited volatility. However, not all “conservatives” accounts are created equal!

If you have lazy money, then let’s talk and find the best way to put your money to work for you!

Reply to set up a time, call us at 608-987-1511 or use our online calendar here!

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