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ABC Process

The Financial ABC’s of Retirement Planning Model is Easy to Understand,
an Alternative to the Wall Street Approach!

A - Yellow Money

Yellow Money

Advantages:
High Liquidity

Disadvantages:
Gains or Lower Return

Examples:
Bank Accounts, CD's, Cash Accounts



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B - Green Money

Green Money

Advantages:
Protection and Protected Growth

Disadvantages:
Partially Liquid

Examples:
Fixed Indexed Annuities or Fixed Annuities


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C - Red Money

Red Money

Advantages:
Returns

Disadvantages:
Overall Risk, Loss of principle

Examples:
Variable Annuities, Stocks, Bonds, Mutual Funds, 401(k)'s, Brokerage Accounts

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How Does the ABC's of Retirement Planning Model Work?

All rights reserved by David P. Vick, used by permission

Let's pretend every asset you have is liquid, moveable, and changeable. Next, ask yourself, if you could make a new plan starting today, what would it look like? That includes your CD’s, money markets, annuities, stocks, bonds, mutual funds, REIT’s, or whatever. So let's distinguish between your “investable” assets vs. assets that are not (i.e. Rental Property or Real Estate).

You will have to imagine your assets not where they are invested today, or last year, or even where they were 10 years ago. We’re not looking in the rear-view mirror, but trying to map out our future.

It is critical that you look at this in that way. You want to have your investments set up for your needs going forward, not left in accounts that might jeopardize your future. Now not all of your assets are going to be able to be repositioned: however, 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.

  • What percent do you need for cash or emergencies, that is you’re A Yellow Money.
  • What percent do you want in the market with risk to principle? That is your C Red Money.
  • Finally add the two percentages and subtract it from 100. The difference is your Protected percentage or B Green Money.