Wealth Building

 

The advisors at Brook Wealth Management practice wealth building. Many potential clients come to Brook Wealth Management assuming that wealth building is just a fancy name for investing. In practice, building wealth is fundamentally different than investing. Let us examine a scenario that illustrates the differences between the two.
 
Sally, a 50 year old woman, inherited a $250,000 IRA upon the death her 60 year old husband. She did not need access to the funds in the IRA, so she told her stockbroker, John, to “invest it and make money.” Over the next 21 years, John managed to grow the IRA from $250,000 to about $2 million. John was solely focused on Sally’s investments and their performance. Due to his narrow focus, the importance of estate planning was never properly addressed. Her will had not been updated in over a decade and no provisions were made to protect her estate from estate taxes. Sally died at age 71 with a taxable estate and her IRA passed to the beneficiaries, but only after both income and estate taxes were taken out. 
 
Although John is proud of the investment performance of the IRA, the lack of planning could cause more than half the value of the IRA to go to the government in the form of taxes. Had appropriate estate planning been done for Sally, her family could have saved over $1,000,000 in taxes. When you are building wealth, it is not what you “make,” but what you “keep” and “leave.”
 
The wealth building process is a journey. Five aspects go into building wealth. 
 
  • Personal and professional goals - Without defined goals, there is nothing to build toward. 
  • Your current financial situation - This is the starting point to your journey. 
  • Your investment time horizon - Will this money be used in 5 years or 15 years? When will you need your money? 
  • Risk tolerance – Can you handle the inherent volatility of the stock market or do you prefer the relative safety of fixed investments?
  • Tax consequences – There are over 10,000 pages in the Internal Revenue Code versus roughly 1,200 pages in most versions of the Bible. Individuals spend a lifetime becoming experts in each one and nobody is revising the Bible.
 
By adopting a broad and integrative approach to your personal and financial decision making, Brook Wealth Management can help you build wealth.
 
As an independent investment advisory firm, proprietary products are not a part of our investment toolkit. As Certified Financial Planner (CFP®) professionals, our fee-based approach ties our success to your account value not to sales commissions.