We Protect What (Who) We Love

Sorry for using the presumptuous, all-inclusive, pronoun we, in the title of this blog, but that's how I feel - "protecting" what (who) we love is a universal truth and a natural phenomenon - as natural as a mother bear protecting her cub. 

PROTECTING is one of the nine activities that I define as the LOVE PRIORITIES in ADVOCATE PLANNING; To Do What You Love To Do (a free down-load, under BOOK on this website www.MySCGpriorities.com). I feel passionately that a simple process of focussing on our love priorities will be most productive for us, result in doing, what we love to do. "Protecting" is all I am addressing in this blog, because that is where my mind is now; having just past a kidney stone and appreciating the value of drinking a lot of water - I love water. I want to protect clean water (a topic for another blog).

  THE LOVE PRIORITIES

THE LOVE PRIORITIES

For those of us with limited assets, income and time, we think about the two market crashes in the last decade, cringe, and plan to protect some assets, so we don't run out of money to live happily now, and maybe even, leave some money to love ones in our estate. How do you do that? Well maybe you want to read the book and/or talk to your financial planner or personal advocate, about your unique situation. As a personal advocate and having been a professional financial planner, I offer what I do for me, for whatever it is worth for you, in your dealing with this protection issue:

I won't deal with all my details here, knowing that a lot of my actions are unique to my situation. What I think is critical for everyone, is knowing which of your assets are "stable assets" - those that will not reduce proportionally, with a market crash, and secondly, how many years of your investment distribution needs, the stable assets represent. If you are young and will be living on your earnings for sometime, you could, theoretically, have no, or very little, stable assets.

I have seven years of distribution needs in what I determine are stable assets. What I include in stable assets are contract receivables, predictable rents, cash and cash equivalents (very short term bonds). I do not include intermediate and long term bonds because I believe bonds are in dangerous territory and may vary proportionally with an equity markets decline. Also, the value of bonds will decrease with increases in interest rates, and rates are unnaturally low presently. Since bonds are tenuous and cash yields nothing to speaks of, I believe in having some, maybe half, of the stable assets in broadly based large cap index funds with a trigger to get out. The trigger I use to get out is the S&P against the 10 and 12 month moving average of the S&P. In other words, when the S&P is lower than the moving averages, I am in cash and when the S&P is greater than the 10 and 12 month moving averages of the S&P I am in the S&P index with some of my stable assets. Does this make sense? Not that history necessarily repeats itself, but, this approach protected the downside, nicely, during the crashes of the last decade. 

Protecting is one of the three activities of Giving, in the Advocate Model. Insurance costs are frequently identified with "protecting". And, who wants to spend money for insurance....until we think about our loved ones and the possible ramifications of loss. Giving is one of the three principle-based Love Priorities in the Advocate Planning Model. "It is in the giving that we receive" (Francis Assisi). Giving - Love, feels good - the opposite - hate, feels bad. I'd rather drink an ice cold water now than Rat poison. Think about it!