About six years ago, I was at the end of a long day and I was meeting with the fourth person who was getting ready to retire that day. As a fiduciary advisor, it’s my job to make sure that my clients are doing the best thing for them. I don’t do a one size fits all. And I always ask, “Okay well, what are the needs?” And for the fourth time that day, I got the same answer: “I don’t know.” But this lady actually said, “I don’t know, I don’t even know what the needs are.” I said, “Okay, that’s interesting.” So I sat down and went over, “Well, what are the five needs?” We wrote them down and then I had her list them out from one to five: one being the most important to her and five being the least important.

I think everybody should do this exercise before they invest any money at all because there are investments that are specifically for one type of need but are terrible for another type of need. So let’s go over what those five needs are.

Need number one is Safety. The question is, are you more concerned of the return of your money than the return on your money? Are you the type of person where you say, “Listen, if my money grows, great, but I don’t want to lose any of it.” Well then safety would probably be pretty high for you.

The second Need is Growth. And this is often overestimated by most financial advisors. They just think that everybody wants as much money as they can get, which some people do. But a lot of times people just want their money to work for them and they don’t really care as much about growth. But if you say, “Yeah, my number one concern is making my money get as big as it can,” then that would be growth.

The third need is Death Benefit. If you have money that you need to leave behind when you die, then that’s probably a pretty high need on your list.

The fourth one is Liquidity. Do you need access to your money? If you’re really young and your money is in a 401k and you can’t access it for 25-40 years anyways, you probably don’t need a lot of liquidity. But if you’re older and you’re about to retire or you need money for a business venture or an upcoming repair in your house, then you need some liquidity available.

And the last thing is Income. And this especially comes into play when you’re retiring because people save money their whole life to be able to turn it into income when they retire. So if you have a certain amount saved and you need to live off that money, which would be income.

So before you invest anything, I want you to do this exercise to make sure what you’re investing in is the correct way. Take out a piece of paper and write down these Five Needs: Safety, Growth, Death benefit, Liquidity, and Income. Then I want you to list out from one being the most important to five being the least important to you and see where you lie.

And from there, you can either make a plan yourself. If you want to use these videos to help educate yourself, great. Or you can take it to a financial advisor and say, “Listen, these are the most important things to me. This is what I want to focus on with my money.” What you don’t want to do is you don’t want to just walk into a financial advisor’s office, give them some money or some paperwork without any guidance of what you want. And to be honest, if somebody is making recommendations without going over what’s important to you, then they’re just selling you something that they want to sell (their product, their plan, or their firm), but they’re not really custom fitting, tailoring a plan for you and that’s what you want.

You want someone who’s going to, just like a tailor would custom fit a suit, you want your financial advisor to tailor fit a financial plan for you. And by the way, a financial plan is way more important than a suit or a dress because this is the rest of your life. So please do the five needs of money, do the exercise and I really think it’ll help you figure out exactly which way you want to go.

Securities and advisory services offered through Madison Avenue Securities, LLC, member FINRA SIPC, and a registered investment advisor. Madison Avenue Securities, and Don Anders are not affiliated companies.