you might be wondering if there’s a triedand true process for successful financial planning.well, there is. we call it ‘the power of the pyramid’.building a personal financial plan is a lot like designing and building a home. firstyou need a solid foundation, or your house will be vulnerable to damage and might eventuallycollapse. insurance comes first. consider the impactof premature death, disability, sickness, or lawsuits on your financial plan. insuranceprovides the protection you need to weather the storms.next, accumulate 3 to 6 months of emergency funds, and prepare wills and powers of attorney.together, these actions form a solid foundation
that can protect you against life’s upsand downs. once your financial foundation is in place,you are ready to begin investing in diversified growth accounts such as a 401k, iras, or otherinvestment accounts. with these things, the objective is to frameyour foundation with a solid savings plan and begin building your wealth.lastly, if your growth assets are significant, you may add more speculative investments likereal estate and other business interests. think of these investments like custom detailsthat have the potential to expand and enhance your home. these investments also have thepotential to lose the most money since they involve the mostrisk.
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