Four Foundations of Wealth

Four Foundations of Wealth

May 2, 2012

Welcome to our initial blog posting. We are Deacon Wealth Management, a firm located in Fredericksburg, VA. Our focus is working with our clients on their Comprehensive Wealth needs.

Our lives and the freedom that we have in our lives are directly determined by the level of financial freedom we can create for ourselves. Financial freedom is created through steady cash flows, which are derived from stable wealth platforms.  

We believe that there are only four fundamental areas to create wealth, and that most people should strive to have exposure to each of these areas in order to stay in balance with their finances. Here they are in no particular order:

1) Real Estate

2) Great Talents/Great Ideas/Luck (Lottery)

3) Business Ownership

4) Stocks/Bonds (Financial Markets)

To use an analogy, these areas are like four legs of a table. If the legs are balanced and stable, the table remains upright and steady. Remove one leg, and a re-balancing of the load must take place. Remove two legs, and the table may need to be leaned against a wall in an attempt to create a stable foundation. Remove three, and one is almost certain to be very unbalanced and in a precarious situation should the leg be exposed to forces beyond one’s control.

To determine a proper financial balance, folks must first get a handle on where all of their assets are and make sure that they complement one another. In short, we see in many instances that folks have one leg that is overdeveloped, versus the others. An overdependence on one area can really hurt when that one area suffers a decline.

This issue of balance among asset classes has really come to light in the last several years as financial markets became extremely volatile, then real estate lost tremendous value, etc. With proper balance, folks are able to weather these “financial storms” with more confidence.

We will delve into this philosophy in more detail in our future missives. It is a core philosophy of our firm, and is very important to our clients in the long term.

Securities and advisory services offered through LPL Financial, Member FINRA/SIPC (www.finra.org and www.sipc.org). The LPL Financial Registered Representatives associated with this site may only discuss and/or transact securities business with residents of the following states: (VA, MA, MD, NC, and FL). The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.