“My accountant says everyone should max fund their 401-k.” Is the accountant right? Unfortunately, a vast majority of people (including many in the financial services industry) will incorrectly answer yes to this question when the correct answer to the question is, “It depends.”

No investment is good or bad for everyone all the time. What may be a great investment for one person may be a horrible investment for someone else.

Let’s play Monopoly

Pretend for a minute that I am a self-proclaimed Monopoly genius, and my advice to you was every time you land on a Railroad, you should buy it. A couple of weeks later, you find yourself in the middle of a Monopoly game and land on B & O Railroad and because of the expert advice you received, you by the railroad. Because you were short on cash, you mortgaged your hotel on Boardwalk to purchase it. In this example, buying the railroad could be a horrible investment. Are we saying that buying the railroads is a bad idea? Absolutely not! What we are saying is that you must have context to ascertain if something is a good or bad investment.

As simple and clear as this sounds, the financial services industry disregards this all of the time. Very seldom are consumers afforded the opportunity to understand the costs and benefits of their financial decisions in advance of making them. A perfect example of this is when we see a young client come into our office who is putting money into their 401k and paying rent. When questioned why they don’t own a property, their answer is often they lack a down payment. The 401k is prohibiting property ownership. Rent is pure cost that is permanent and unrecoverable. In this example, the 401k purchased out of context is the problem, not the 401k itself.

A financial decision made in one area has an impact on every other area, whether you realize it or not. Only through evaluating decisions in the “Macro” can effective planning decisions get made. Our goal at RJA is to provide our clients with a planning tool that gives them the opportunity to test investment strategy before it is implemented. We provide our clients with the ability to assess and understand the costs and benefits of every financial decision before they make it.

We would love the opportunity to share with you our approach to achieving financial success.

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