We started our discussion of Wealth, in the context of The Natural Wealth® Process, in January with a review of Person Wealth and the three “C’s”: Capacity (Health), Capability (Knowledge and Skills), and Connections (Family, Friends, and Business Relationships), and the concept of Working Person Wealth (Human Life Value). We discussed how Person Wealth morphs when one fully retires but is still very important (particularly Capacity and Connections). The bottom line is that any discussion of Wealth begins with our personal ability to generate income to invest and build financial wealth while working, and the ability to enjoy the fruits of our work and investments later in life, which requires ongoing Capacity (Health) and healthy relationships with family and friends (Connections).
In February, we outlined Portfolio (Financial) Wealth. Accumulated financial wealth, or as we call it “Vision Fuel”, will ultimately serve as a replacement over and above any government or defined benefit employer pensions for our Working Person Wealth when we fully retire (e.g. our registered and non-registered investments, investment real estate, and family businesses).
In addition to providing income for us when we are no longer working, accumulated financial wealth also provides resources for our larger household financial goals, even while we are still working. Household financial goals could include things like home purchases, education funding, recreational property purchases (if applicable), vehicle purchases, and other larger expenditures that occur from time to time throughout our lives.
In March we reviewed Possession Wealth. Possession Wealth is, simply stated, our possessions or lifestyle assets including: homes, cottages and other recreational real estate (if applicable), vehicles, recreational vehicles, household furniture, and collectibles. Possessions are sometimes referred to as the “stuff” in our lives. Often Possession Wealth (possessions) requires income from Person Wealth or Portfolio Wealth to own and care for. Even homes and cottages require ongoing upkeep and renovations to preserve and enhance their values. Cars and other depreciating assets require replacement from time to time. Homes and cottages have held and even increased in value historically. It is wise to think that this might not always be the case. There are many, many good reasons to acquire and own certain possessions. While that is the case, one would be wise to think carefully before acquiring additional possessions. Things accumulate . . . and money once spent is gone, especially after the return period expires!
We are attaching a summarizing worksheet for you to compile your own “Natural Wealth® Statement”. If you have any questions about how to complete the worksheet please call our office. Once complete for 2018, store it away so we can compare the year-over-year numbers in 2019 and beyond.
You will see that as we progressed through the Wealth discussion, the worksheets you may already have accessed have changed. This is the result of feedback and further “honing” the tools we are using. If you have any questions or feedback please feel free to share it with us so we can continue to improve the process and experience for everyone involved.
In April, we will begin our discussion of Tax and Estate planning considerations in the overall Wealth planning process. We will break the subjects down and provide insight and advice on how to increase after-tax incomes and maximize estates through proven financial life planning strategies and tactics.
David J. Luke, CFP, RFP, CLU, CH.F.C., CIM | Financial Advisor
360 Private Wealth Management | Manulife Securities Incorporated
Unit 1 – 25 Scurfield Boulevard, Winnipeg, MB R3Y 1G4
Main Office 204.925.5868 | Direct 204.925.2073| Fax 204.925.2263 | Toll Free 844.688.3656