In this episode, John emphasizes the necessity of taking the long view in your financial plan. Most financial decisions are made in isolation (one tree). However, they will have ripple effects throughout your entire plan (the forest). It’s best to make decisions with the broad and long view in mind.
John’s strength is his ability and commitment to improve the level and quality of the financial planning process.
His dedication to his clients’ growth involves an evolving strategy. His focus is to meet the demands, desires, and needs of his clients in a changing economic environment.
John’s detailed examples illustrate how to protect your wealth now and in the future:
- Firstly, the micro view of a 15-year mortgage says, “This is a good idea. I’ll pay less interest on my mortgage and less for my house overall.”
- But if you take a macro view, you see that as your mortgage interest deductions lower over time, your taxable income increases.
- With the macro view, you see that as you make the high monthly payments that come with a short-term mortgage, you will have more of your money tied up in it. This violates the economic goal of the efficient use of capital, which is to get the maximum amount of benefits for every dollar spent.
- With a macro view, you see that as your interest income compounds, your taxes compound too. And as your taxes increase, your savings rate decreases. It will be hard to compensate for that with high mortgage payments.
- Also, with a macro view, you surmise that over 15 years property taxes are likely to increase. So will homeowners insurance, and other expenses.
- Lastly, with a macro view, you might take a 30-year mortgage instead. For details on what that looks like, listen to the full podcast.
For more on mortgages, taxation, and how to take the macro view of your plan, talk to an experienced wealth manager at Smallwood Wealth.
If you are new to Smallwood Wealth schedule a Wealth Curve Conversation here.
You can also call 732-542-1565.