Jim Sims - Becoming Wealthy vs. Remaining Wealthy

Jim Sims -Becoming Wealthy Vs. Remaining Wealthy

Hi everybody, Jim Sims with Signature Wealth Management Group. Would like to take a minute just to share with you one of life's lessons learn from over 25 years as an investment advisor, and that's the difference between becoming wealthy and remaining wealthy. And I would say these two things require two completely different skill sets.

So there are several ways that you can become wealthy. It might be sudden liquidity event, weather it be lottery winning or divorce, or even a business owner selling out his business. You might have become wealthy as an executive in a Corporation where they've granted you options. They have granted you restricted stock, and now you've got all of this wealth builtup in a particular company stock. Or you might have accumulated your wealth over time by disciplned savings into a 401k plan, IRAs, and things like that. But I would still say that the act of remaining wealthy requires a different mindset than the act of becoming wealthy.

When you're trying to become wealthy again, you're concerned about your rates of return or the growth on your savings. When you're trying to become wealthy again, it's an entirely different proposition where you don't need to be focused as much on your rate of return or rate of growth on your investments, but much more so on reducing the volatility or reducing fluctuations. Because when you go from the accumulation phase to the distribution phase or the drawdown, if you have to make a large draw on your savings while the account value is diminished, it didn't matter if your investment recovered.

Your money didn't recover because you've already spent a significant portion of it. So to have that minset, you have to make some decisions that wouldn't have made a lot of sense when you were trying to accumulate, such as taking a lower rate of return on a bond or a CD to make sure you get your principal back, or also do what we talk about,