The secret to a successful retirement is ensuring you have liquid net worth.
Having a highly liquid net worth is key to being able to enjoy your current lifestyle throughout your retirement. It isn't just about accruing as much wealth as you can during your working years. Make sure you have enough liquidity to fund your retirement dreams.
High net worth individuals often hold a lot of their wealth in illiquid assets such as a business or real estate. Having valuable assets is important, but the question is how will these assets pay your bills when you retire. Since you are no longer working, you don't have the pleasure of cashing those paychecks anymore. So where will the paychecks come from now?
Just like with a business, cash flows is key. Many businesses have found themselves going out of business despite owning valuable assets. The reason is assets don't pay the bills - cash does. Retirement is the same way. Your stocks, business and real estate won't pay your bills each month. You need assets that generate cash flows, or that can be easily converted into cash.
The tricky part of this equation is that highly liquid assets generally don't provide as attractive of a return. So how do you balance liquidity and return? It is essential to work with an experienced, skilled financial advisor to ensure that your dreams don't retire before you do.
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