If it’s too good to be true, it usually is!
Over the fourth quarter, we want to share real "it's too good to be true" case studies with this Fiscal HarmonyTM community. Many of these stories have a genesis in market volatility moments…just like now. This month, we are addressing illiquid investments. Our goal is to make you wiser investors, even if you never choose to work with us.
Illiquid Investments - Are they right for you?
Endowments, institutions and family offices sometimes use investments that can be illiquid, for example, real estate. Illiquid investments can take many forms, but essentially, illiquid means that it can be harder to find buyers if you desire you want to sell the investment in a specific timeframe.
For instance, investors with rental real estate in 2009, may have found it difficult to sell at a great price. Ten years later, in 2019, it would have been a completely different story. These kinds of disconnects in business cycles, access to capital and other factors can hinder an investor's cash flow. Sometimes these types of investments can make sense for clients, and sometimes these outside factors make it difficult to properly manage cash flow.
In more than a decade in the industry; we’ve seen various types of investments that are not as easily liquid as the investor needs them to be. This lack of liquidity can cause challenges for clients, both individually and as business owners.
Recently, we've seen an increase in the marketing of products that can have illiquid components or other provisions that carry costs if sold early. Following our SCORE process both for planning AND for investment selection helps us and our clients to ensure adequate cash flow is available. For our entrepreneurs, maintenance of cash is vital to thriving in rapidly changing environments.
Orchestrating Fiscal Harmony™,
Kelly Kunst CFP®
2022 Five Star Wealth Manager
Once again, I am honored to be named a Five Star Wealth Manager by Texas Monthly. Nearly 4,000 Dallas-Fort Worth wealth managers were considered for the award; ten percent of these candidates were named 2022 Five Star Wealth Managers. Being recognized is always nice, but the real blessing is serving families and helping them on the path to fiscal harmony in their lives.
There are risks involved with investing which may include market fluctuation and possible loss of principal value. Particular investments may not be suitable for certain situations. Carefully consider the risks and possible consequences involved prior to making an investment decision. Our firm does not provide legal or tax advice. Be sure to consult with your own legal and tax advisors before taking any action that may have tax implications.
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