medium · Certified Financial Planner Estate Planning
The Nguyen family has 12,000 in total monthly expenses. They have an emergency fund of 15,000 and 40,000 in a brokerage account invested in high-beta growth stocks. Mrs. Nguyen's employer provides no disability coverage, and they have no personal policy.
Following Heuristic H6 (Risk Before Return), what is the priority?
- Secure disability income insurance and increase the emergency reserve to at least 36,000 before further equity accumulation.
- Maximize contributions to a Roth IRA to take advantage of tax-free growth while the clients are in a lower bracket. in this case
- Calculate the exact NPV of their current investment strategy compared to a more diversified approach.
- Rebalance the brokerage account to a more conservative allocation to reduce the sequence-of-returns risk.
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