mardi 26 décembre 2017
I’m a Financial Advisor - and I Rent My Home and Lease My Car
Renee Cohen is a financial advisor whose mission is for you to love your money story.
As a successful woman in my 30s, people are often surprised to learn that my car is leased and my home is rented - especially when they find out I'm a professional financial advisor.
I am very open with my personal philosophies and my own personal financial journey with clients. When it comes to financial planning and goal-setting, everyone's situation is different. You've got to evaluate all the pieces around you to ask: "What is the best fit for me?" And for me, personally, home ownership is not something I strive for at this present time. I prefer to build my assets in other ways.
I'm definitely not against home ownership. But you don't have to own just because society says you have to own. It's OK to rent!
Why Owning Isn't Everything
My philosophy has always been that real estate is a great piece to have in your overall portfolio, but it's not the only thing to have. So many people have tunnel vision about real estate being a great asset. And it is! There are tax deductions that go along with it. But there are also a lot of complications that go along with it. And that's beyond just saving for the down payment. When you own a house, everything else is on you.
When I talk to people about saving for a house, we can't just talk about the 100 grand that you want to put down. What about that question for the plumber? When you need a painter? Furnishing the house? Most people are not going to just take all their furniture from their one-bedroom apartment into a home and call it a day.
Our generation is redefining the American dream.
Bottom line? You don't want to become house poor. I've had some clients who are now pinching pennies because they pulled the trigger on buying a property - that million-dollar condo that's not going to be their forever home - and now they're pinching pennies in other capacities. They're not diversifying their portfolio. They're not building meaningful savings.
I also live and work in LA, where real estate is notoriously expensive, which is important for people to keep in mind. Many of us saw our parents' generation get married, have kids, and buy a home. But I think our generation is redefining the American dream - especially in a market where our dollar obviously doesn't go as far as it used to.
Other Places to Save
As an advisor, I look at assets in four to five main buckets. One bucket is cash: a good emergency fund that could cover you for about six months. The second bucket is a tax-deductible bucket - a 401(k) or Traditional IRA. The third bucket is a taxable bucket, which includes nonqualified investments for your mid- to long-term goals because you don't want money sitting on the sideline in cash. You want to have some opportunity for growth relative to your risk tolerance. The fourth bucket is a tax-free bucket - the most common vehicle is a Roth IRA, but there are income restrictions, so it is important to understand how to build that bucket when you don't qualify. And a fifth bucket is real estate.
But real estate is not a liquid asset. In an emergency, what if you don't have an emergency fund and all your money is also locked up in a 401(k) or real estate?
Why I Love Leasing
My initial conversation with clients is understanding their why. What's the why? What really drives and motivates them? What's important to them in the long term? And then I can connect their "whats" and build a plan around that. But I always joke that the plan is like a car: because as soon as we're done with the meeting, it changes. It's like buying a car - as soon as you drive off, it depreciates.
In my own personal life, one thing that I love is having a new car every year. So I lease my car. I've always factored a car payment into my budget, and I'd much rather have one and be able to drive to the dealership if something goes wrong or turn it in when I want. I don't want to deal with having to sell a car. And I won't benefit from purchasing when I'm planning to get a newer vehicle so often.
The Healthiest Strategy
We should all be architects of our own financial lives based on our own personal goals and philosophies. Maybe real estate isn't right for someone. And if I'm advising women, let's talk about family life and work. Do you want to have kids? Do you want to freeze your eggs? Let's talk about the costs associated with that. There's traditional and there's nontraditional, and that's fine, and it could change for you.
As women, we want to be empowered, financially - where we're not having to make personal and professional decisions because we're beholden to the financial part of our lives. That's where I really like to help women understand all the dynamics, so we can be empowered. And that means something different to everyone.
- As told to Lindsay Miller
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