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I was talking to a client when he was 10 minutes into his first pickleball lesson when he went back to hit a shot, fell on his back, and broke his hip. It was an inauspicious beginning for a sport that should be easy for everyone. But speaking ill of pickleball is sacrilege, so instead the University of Utah’s student applied some lessons learned from U Health’s “Pickleball Safety Do’s and Don’ts” to financial planning. I decided to do that.
Pickleball Rule No. 1: Know your risks. Pickleball injuries are possible, but they can prove more dangerous because they can last longer if you don’t fully understand the risks in your financial planning.
We have clients whose homes were burned down or destroyed by hurricanes, and clients who were members of condominium associations and were left with common charges due to insufficient coverage from their homeowners associations. It is always a good idea to have an annual meeting with your real estate company/insurance company to discuss what coverage you have and, importantly, what coverage you are choosing not to have. Recommended. As construction costs continue to rise, including full replacement costs in homeowner policies is a starting point. If you have any size of personal assets, purchasing additional liability coverage is an inexpensive way to protect yourself in case the unexpected happens. Insurance should be for things that are hard to cover on your own, not as a reward to pay for things you can otherwise pay for. You can get better coverage by choosing a higher deductible as your payment method.
Life insurance is used to build wealth if you don’t have property, or to pay inheritance tax if you do have property. However, for most people, the need for life insurance is not forever, so make sure to fit the term of your life insurance into your desired schedule. The same goes for disability insurance. This is important when you need an income, but being self-sufficient reduces your financial risk. Disability insurance protects your spending needs and does not necessarily replace your income.
The purpose of investing is ultimately to spend or donate what you invest. This means he faces two real risks: volatility and inflation. Volatility is a short-term risk and inflation is a long-term risk. Markets go up and down, so manage the risk of volatility by diversifying properly and timing your investment decisions over time. Inflation is even more dangerous. If your savings account earns 4%, you may be behind after taxes and inflation. Embracing volatility protects you from inflation risk. Over time the range of returns shrinks (the range of returns for 20 years is smaller than the range of returns for 1 year).
Pickleball Rule No. 2: Talk to your partner. In pickleball, you don’t want to run over each other, so you have to talk to each other and come up with a strategy. I can’t count the number of couples we counsel who sit down in our office and discuss money for the first time. Oh, sure, they may have had money discussions and tacit agreements, but they hadn’t established a way to not bump into each other when talking about money. Regardless of who makes the money, marriage is a partnership, where each partner gets a legitimate say in what they want today and how they envision their future together.
Pickleball Rule No. 3: Don’t forget to stretch. If you want to avoid injuries while playing pickleball, you need to loosen up before playing and stretch after playing. If you want to live a good life financially, you need to understand when and how to stretch. Clients often rely on myths about conservative assumptions because they don’t want to count on things, even though it’s likely to happen. A young professional with a steady job, perhaps with a stable and increasing income, may find it a little too much for the family. If you have elderly parents and may inherit something, take that into consideration when making your plans. It’s not greedy, it’s prudent. However, stretching should be done consciously and deliberately. This is no excuse for wasting money unnecessarily.
Pickleball and money can be fun if you understand how to play the game.
Ross Levine is the founder and president of Accredited Investors Inc. Edina, a fee-only asset management firm.
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