Onyx Investments associates thoughtful financial planning with strength that undergirds all successful endeavors. Our money management strategies help to establish long-term wealth through growth, while also minimizing the risks of financial loss. Financial responsibility begins with cash and debt management, alongside adequate insurance coverage. Beyond these strong foundations, your financial plan transitions into putting together an investment portfolio that is in line with your life goals. Financial strength precipitates the ultimate goal of total freedom.
Again, financial strength begins with budgeting. Preserving strong cash flow is critical to provide for day-to-day expenses and to build savings. At this point, it is critical that you work to live far beneath your means—where personal expenses are significantly less than your income. Beyond paying bills, responsible money management includes built in contingency financing—through savings vehicles and insurance policies. Responsible cash management strategies provide the liquidity to both make large purchases and sustain financial relief amid untimely emergencies. Additionally, health and life insurance coverage are critical to protect your family’s earnings power—in the event of sickness and premature death.
Cash management and insurance strategies are also associated with establishing good credit. Failure to preserve stable cash flow through proper budgeting, alongside a lack of adequate insurance coverage, may force you to rely upon credit to make purchases. Large credit balances lead to increased interest expenses that adversely affect your bottom line. Financial strength, of course, calls for minimal levels of bad debt. Bad debt is associated with high-interest credit cards and consumption spending that erodes net worth. Sophisticated clients often leverage low-interest debt, such as margin, mortgages and student loans, to accelerate wealth creation. Timely debt payments, of course, contain future costs, because prospective financiers evaluate credit reports before approving loans and setting interest rates.
Strong money management effectively balances potential risks against rewards when making financial decisions. Over the long term, investors may expect higher potential returns in exchange of taking on more risks. The Standard and Poor’s Equity Index 500 is a benchmark for United States stocks that illustrates this risk versus return relationship. The S&P 500 Index has averaged eleven percent annual returns, since its 1957 inception. These average returns, however, include 38 percent gains in 1995, alongside 37 percent losses in 2008. Money market deposit accounts and bonds do not offer the potential gains associated with stocks, but they are also far less volatile investments. Low-return fixed assets, however, are subject to inflation risks that erode purchasing power over time.
Diversification helps clientele build wealth across various economic scenarios. For example, stocks generally perform well amidst times of economic growth, but may lose value heading into recession. Alternatively, bonds typically generate low, but stable investment returns and interest payments throughout the economic cycle. Savers should increasingly add bonds to their investment mix as they approach and enter retirement—to reduce financial risk. Young investors, however, are often best served with the growth potential that comes with heavy stock market exposure throughout their twenties and thirties. The Onyx Investments mission is to drive you towards financial freedom – so that you may ultimately operate from a position of strength.