Frequently clients tell me when investing
for their business succession plan, I do not want to take any risk. I always respond with another question. “Where will you invest then?” Most people will say, “In
the bank where my money is safe and there is no risk.” To which I smile and say “your money
is not safe in the bank and let me explain why.”

Two forces that ravage your money are TAXES
AND INFLATION. Let’s say you choose a
typical Money Market Account where you can receive .50% interest. What really happens to your money? You are losing it. Let me explain how.

You are probably in a 25% federal income tax
bracket. So your .50% is now diminished
to .3750%. Additionally economists
currently say Inflation is running at 1.6%, a figure I must admit is grossly
understated but let’s go with that. So
now your .375% after taxes is reduced to a net return of NEGATIVE – 1.225%.

Always consider the impact of taxes and
inflation on your investments.