Your Fiscal Physical

By Ryan Nelson

Almost 75% of Americans rank money management as their number one cause of stress. You don't have to be one of them anymore. Improve your financial literacy and take control of your finances with Your Fiscal Physical. Each chapter takes you through one of seven key areas to improve your money management skills and work toward financial independence.

 

Your Fiscal Physical is ideal for:

• Recent graduates looking to minimize the impact of student debt and maximize retirement planning
• Established earners who want to create a family budget, learn to invest, and/or increase savings
• People nearing retirement age who want to ensure their future financial security
• Retirees searching for more confidence in their financial security throughout retirement

Whether you're a personal finance beginner or you're simply looking for a fresh perspective, you'll find realistic, actionable advice covering the most critical areas of effective financial management.

 

Your Fiscal Physical is written by a financial advisor with years of experience empowering people at all stages of life and wealth to make positive, lasting changes. Ryan Nelson shares his expertise in easy-to-understand lessons without any sales pitch or agenda.

 

Each chapter of the book focuses on a different, critical area of fiscal planning, including:

• The Psychology of Money
• Budgeting
• Understanding Your Credit Score
• Managing Debt
• Retirement Planning
• Investing
• Risk Management and Life Insurance
• Tax Management
• Estate Planning

Complex topics, like investment management and retirement planning, are broken down into manageable segments and explained with useful graphics. The end of each chapter contains key takeaways, and action items you can use to create a to-do list and make progress on your money management goals.

 

True financial security doesn't have to be limited to the 1%. If you're ready to pursue financial freedom, and eliminate one of life's biggest stressors, Your Fiscal Physical is the personal finance workbook you need.

• Language: English
• Publisher: Ryan Nelson
• Release date: Nov 9, 2023
• ISBN: 9798223957522

Book preview

YOUR FISCAL PHYSICAL

7 Keys to Becoming Financially Fit

RYAN NELSON

Copyright © 2023 Ryan Nelson. All rights reserved.

The content within this book may not be reproduced, duplicated, or transmitted in any form or by any means, mechanical or electronic, without direct written permission from the author.

This book is for information and entertainment purposes only. The views expressed are those of the author and should not be taken as expert opinion, instruction, or command. Neither the author nor the publisher assumes any responsibility for errors, omissions, or contrary interpretations of the subject matter herein. The reader is responsible for their own actions.

Neither the author nor the publisher assumes any responsibility or liability whatsoever on behalf of the purchaser or reader of these materials. Under no circumstances will any blame or legal responsibility be held against the publisher or author for any damages, reparation, or monetary loss due to the information contained within this book, either directly or indirectly. Any perceived slight of any individual or organization is purely unintentional.

Legal Notice:

This book is copyright protected. It is only for personal use. You cannot amend, distribute, sell, use, quote, or paraphrase any part of the content within this book without the author’s consent.

Disclaimer Notice:

Please note that the information contained within this document is for educational and entertainment purposes only. All effort has been expended to present accurate, up-to-date, reliable, and complete information. No warranties of any kind are declared or implied. Readers acknowledge that the author is not engaged in rendering legal, financial, medical, or professional advice byway of this publication. The content within this book has been derived from various sources. Please consult a licensed professional before attempting any techniques outlined in this book.

By reading this document, the reader agrees that under no circumstances is the author responsible for any direct or indirect losses incurred because of the use of the information contained within this document, including, but not limited to, errors, omissions, or inaccuracies.

Library of Congress Control Number: 2023917860

CONTENTS

Introduction

Our Investment Phases

Why Did I Write This Book?

How To Get The Most Out Of This Book

My Challenge To You

What This Book Is Not

Key One: Financial Literacy

Psychology Of Money

Putting Your Money To Work For You

How the Economy Affects Your Money

Financial Statements

The Value Of Financial Outsourcing

Key One Takeaways

Key Two: Financial Management

Budgeting

Understanding Your Debt

Master Your Credit

Emergency Funds

Key Two Takeaways

Key Three: Retirement Planning

How To Perform A Retirement Needs Analysis

Determining Your Savings Rate

Which Retirement Accounts Can I Use?

Withdrawal Rules For Retirement Accounts

Social Security

Hedging Your Risk With Annuities

Key Three Takeaways

Key Four: Investment Management

Investment Asset Classes

Funds

Risk Versus Reward

Asset Allocation

Asset Location

Modern Portfolio Theory

Efficient Market Hypothesis

Active Versus Passive Investing

Rebalancing Your Portfolio

Focus On What Matters

Key Four Takeaways

Key Five: Risk Management

Four Types of Risk Mitigation

What Is Insurance?

Risk/Needs Analysis

Life Insurance

Health Insurance

Property and Casualty Insurance

Umbrella Insurance

Disability Insurance

Long-Term Care Insurance

Taxes and Insurance

Insurance Professionals

Key Five Takeaways

Key Six: Tax Management

Income Taxes

FICA

Capital Gains

Dividends

Tax-Loss Harvesting

Tax Deductions versus Tax Credits

Property

Charitable Gifting

Business Taxes

Investment Properties and Taxes

Retirement Tax Strategies

Key Six Takeaways

Key Seven: Estate Planning

Probate and Wills

Transferring Your Assets Outside of Probate

Long-Term Care

Other Important Legal Documents

Taxes and Estate Planning

Key Seven Takeaways

Conclusion

Key One – Financial Literacy

Key Two – Financial Management

Key Three – Retirement Planning

Key Four – Investment Management

Key Five – Risk Management

Key Six – Tax Management

Key Seven – Estate Planning

Help Us Help Others

Please Remember

You’ve Got This

References

Introduction

If you have gotten to this point in your life and have managed to grow a six- or even seven-figure net worth, you deserve congratulations!

If you have yet to build a six- or seven-figure net worth but are picking up this book to learn financial best practices, then you are well on your way, and again, congratulations!

Either way, the journey is often lonely, and the victory is silent. In today’s world, where everybody posts about every life change on social media, publicly discussing money is still taboo. Therefore, here you are with one of the most significant accomplishments of your lifetime, probably known only to you and a close family member. 

As someone who works in the financial industry, I fully appreciate what it must have taken to build your nest egg thus far. However, words cannot describe all the hard work, sacrifice, and discipline required to get to where you are today. 

While your peers might have been out enjoying every dollar of their paychecks and buying shiny new toys, you understood the benefits of delayed gratification and putting your dollars to work for you. 

If you are like me, there were—and probably still are—times when you questioned whether you were doing the right thing by saving and investing your hard-earned money. Stay consistent. It is worth it in the long run.

As of this writing, the median net worth of a couple between the ages of forty-five and fifty-four is $166,600.¹ One hundred and sixty-six thousand dollars is something to be proud of, but when you subtract the equity they have in their homes, there isn’t much liquid capital left for the average couple’s future retirement goals.

You may be using a tax-advantaged retirement account you discovered when your employer handed out those benefits packets at work, or you may have found success by investing in the stock market or even dabbling in real estate. If you are reading this book, you are probably either beginning to see the possibility of retirement on the horizon or you have a goal of becoming financially independent (a topic I will explain later in the book). At the same time, you might be experiencing fear and anxiety, especially when knowing what to do next with your money. These emotions are natural and expected; I will coach you through them throughout this book.

Why are these feelings of anxiety and fear present? Well, retirement generally marks the end of an era for your finances. As long as you are employed, you will be in the accumulation phase, where income rolls in, and you can stash it away as you see fit. However, once you leave your job and start living off your nest egg, you’ll enter the next phase, which can be scary: figuring out how to make your nest egg last the rest of your life. Although this process of spending your hard-earned savings is called the distribution phase, it is an entirely different game than the one you just played.

You want to remember your end goal throughout the accumulation phase and begin planning early for your future distribution phase. Planning will ensure you have everything in place to enjoy a successful and stress-free retirement.

Our Investment Phases

Our investment journey has two distinctive phases: accumulation and distribution. The accumulation phase consists of accumulating wealth from the first day of your first job to the day you retire. During the accumulation phase, you are focused on saving money in preparation for your eventual retirement. At retirement, we shift from accumulating assets to living off the investments we have made. This is called the distribution phase. The distribution phase lasts from retirement to the end of your life.

Most of us take for granted the ability to ride out the bad times during the accumulation phase of our lives. It may be scary if the financial markets start to head down during this phase of life, but ultimately, it is no big deal. You are not planning to spend your retirement savings for years, possibly decades, so you ride it out. You wait a year or two until the economy turns around. Eventually, it does, and everything seems to return to how it was before the market’s downturn. Your portfolio is improving, and your retirement goals are back on track. 

During the distribution phase, however, that sense of security is gone. The ups and downs of the market matter, and they matter a lot. Every time the news says that the stock market dropped a percentage point, it could mean losing tens of thousands of dollars—or more—in a single day, depending on the size of your nest egg. You are retired, and you rely on that money to be there. It’s the money you were planning to withdraw to pay your bills. So, what are you supposed to do?

Everything I’m describing has been a painful reality for many retirees. During the Great Recession of 2008, many hardworking Americans saw their life savings cut in half in less than a couple of years as the housing bubble burst and took down the entire economy. Some people who had invested aggressively (maybe too aggressively for their current phase of life) saw their portfolios drop even further, especially those investors who committed the cardinal sin of not properly diversifying.

It was an emotional time. Retirees were terrified that they would run out of money. The fear forced many a retiree to look for work again. Unfortunately, finding a job is difficult when the economy is in crisis.

Accumulators near retirement also took a hit. They thought they had just about saved enough money for retirement. Then they lost years of savings in just a few months. It would be hard not to feel a bit cheated.

This situation wasn’t exclusive to retirement planning. People who were saving money hoping to put their children through college, buy a new home, or start a new business saw their dreams evaporate.

You may have done great so far at saving, investing, and taking calculated risks that have paid off, resulting in substantial net worth. And once again, congratulations are in order. If you are in this position, now would be the time to begin planning for the distribution phase of your life.

How much will you be able to withdraw each year to squeeze the most out of your nest egg in retirement?

Do you know how to mitigate the risks if taxes increase in the future? What about inflation? Or interest rates?

Do you know how to protect your finances if we have another recession?

What about after you leave this earth? How will you ensure all your hard work is left to your loved ones or future generations?

Do you know which tools to use so your wealth is transferred efficiently with as little court interference as possible?

How can you avoid the hassle and costs associated with probate?

Do you know how to avoid excessive taxes so that more money makes it into the pockets of those you choose?

When is a will or trust necessary?

I have good news if you don’t know the answers to all the questions above. I will help you answer all these questions and more as we work through this book.

I want to help you help yourself and ensure you enjoy all the money you’ve worked so hard to accumulate. I want to see you accomplish your financial goals and get your nest egg to the point where you never have to worry about the markets again. Life is about living, and together we will create a plan. I will help you put your money to work so you don’t have to.

Why Did I Write This Book?

I am a financial advisor, yet I understand wholeheartedly why so many are do-it-yourself investors.

Over the years, many people in the finance industry have shamefully taken advantage of their clients. We have all heard of characters like Bernie Madoff (who ran one of the largest Ponzi schemes in history), Jordan Belfort (the financial criminal whose story is told in The Wolf of Wall Street), and Samuel Bankman-Fried (the founder of the cryptocurrency exchange FTX and trading firm Alameda Research). So, it is no wonder the financial services industry has lost the public’s trust.

These individuals intentionally ignored their clients’ best interests. They were concerned only with their own best interests. And they made their fortunes by taking money from others. Unfortunately, actions like these and many less egregious indiscretions hurt good, hardworking people like you every day. They leave the financial services industry with a black eye and, unfortunately, often deservedly so.

The actions of these criminals and bad actors don’t represent the financial services community, and we are taking steps to demonstrate this to our clients. To further build trust, many financial advisors are becoming fiduciaries. (Fiduciaries have a legal and ethical obligation to act in their client’s best interest.) Many people would assume that every financial advisor has the same legal and ethical responsibilities. However, this is not necessarily the case. Many advisors are held to a suitability standard, meaning the recommendations they make to their clients must be deemed suitable and do not necessarily need to be in their best interests. According to the 2022 Edelman Trust Barometer, financial services remain one of the least-trusted sectors, only more trustworthy than social media.²

The information age has revolutionized the tools and knowledge available to individual investors. For example, the latest news and market data, which used to require a subscription to the Wall Street Journal, is now accessible through an app on your smartphone, updating nearly in real-time.

Anyone interested in taking their finances into their own hands can go on YouTube and watch an endless stream of self-proclaimed financial gurus spewing advice on topics ranging from how to retire in your thirties to a step-by-step process to build a rental property empire. But, of course, with so much content, only some of it will be accurate, relevant, and applicable.

Financial institutions have reduced barriers to entry by eliminating sales commissions that used to cost as much as $20 per trade. Financial institutions that used to require minimum deposits of thousands of dollars now let people get started with virtually no money. The meme stock craze of 2021 (stocks that went viral due to their popularity on the internet, most notably via Reddit) taught us that virtually anyone with a stock trading app and a desire to play the game could have a seat at the table. 

At the same time, too much information can be a double-edged sword. Just because it’s out there and available doesn’t mean everyone will know what to do with it. So how do you take all these pieces and put them together? How do you formulate a financial plan tailored to your needs and your family’s future needs? How do you have any confidence that what you’re doing is right and will work? How can you be sure the information you are consuming is accurate, applicable to your situation, and in your best interest?

To make things even more confusing, sometimes bits of this information contradict one another. I can’t tell you how many times I’ve gone online and seen financial personalities giving contradictory advice:

The stock market is going to crash. So pull all your money out now! versus Stay invested for the long haul.

Paying off your home is a nonstrategic financial decision. Leveraging a mortgage is like free money. versus Paying off your home is the best financial decision you can make.

Investing in retirement accounts doesn’t allow you the flexibility necessary to retire early. versus Be sure to maximize your retirement accounts for their tax advantages.

The main problem with trying to sift the gold from the garbage is that the stakes get more significant as your net worth grows. When you had just started and had $10,000 to your name, a 10 percent loss was only $1,000. However, when your portfolio grows to $1 million, a 10 percent misstep will cost you $100,000. The risks are much higher.

This confusion is why I have written this book.