I wanted to start my posting with an article to set a base to explain the importance of pointing out that there is more to the financial health than just investments.

In order to have a better understanding of "financial planning" we should refer to the Financial Planning Pyramid (shown on the below).

Contrary to the misconception of many people, financial planning is not only investment and (or) investment-management. It should start with protecting your most valuable assets:

1. YOUR PRESENT & FUTURE ASSETS

2. YOUR PRESENT & FUTURE EARNING POWER!

... Which in fact relates to your "Risk Management".

In other words, your financial planning has to be built on solid foundations where your risk management has to be implemented first. Major components of your risk management include; your auto insurance, your homeowners insurance, your umbrella insurance, your health insurance, your Medicare supplement insurance, your life insurance, your disability insurance, and your long term care insurance.

When your risk management (or your complete financial planning) is structured on solid foundation, your wealth accumulation as well as Wealth Preservation & Distribution takes presence comfortably without the fear of losing any of your hard-earned assets.

Next section on the Financial Pyramid is your Wealth Accumulation where your retirement investments (401(k), SEP, SIMPLE, KEOGH) as well as your College Savings/Investments, your personal savings & investments should carefully be diversified and allocated according to your risk aversion and your future goals and objectives.

You should also note that this process should also include your accountant to make the best of your returns as far as the taxes are concerned.

During the process of structuring your Risk Management and your Wealth Accumulations, various important parts of Wealth Preservation & Distribution should also be taken care of (i.e. your Will) as well as your Trust, if necessary.

Yet there comes the time when you need to have an attorney as well as an accountant involved to structure a sound estate planning that also includes Wealth Distribution.

Important Note: Since every section of the Financial Pyramid is an integrate part of each other, when building your Pyramid it is not necessarily recommended to build the Risk Management first, then the Wealth Accumulation and then finally the Wealth Preservation & Distribution... You build each part simultaneously... The idea of sectioning the Financial Pyramid is to show the importance of the every section relative to each other as not to skip the essential parts.

Gurhan “Gary” Demirkan

Bishop Financial Group