Q: What is the most powerful financial asset and why?

You hold the key to wealth

I would say that the most powerful financial asset is you. All of your other assets (investments, retirement plans, etc.) are dependent on how well you plan and manage your own strategy.

Your financial success or failure will depend on your earning abilities over your lifetime, your health, your profession and your longevity, to name a few. A good education and lifelong learning will produce a better return on investment than almost anything else. In general, college-educated individuals and/or individuals with professional degrees will generate higher incomes and more net assets than those without formal education or training. An investment in your own professional advancement will always pay the highest dividends.

In terms of tangible assets, I would say a home is the most important place to start. You will always need a place to live, and a home will build equity over time in addition to providing significant tax advantages. Often, individuals will downsize at retirement into a smaller, less expensive home where there may be additional cash available upon the sale of the larger home. Individuals have a $250,000 capital gain exemption (married couples have $500,000) if the home was their personal residence for two years (within the past 5 years) before the sale. There are few financial assets that can provide this sort of advantage over the long term.

Vince D’Amato

financial planner

Real estate is solid investment

You may already have the most powerful financial asset and not even know it. It is frequently overlooked. Some might point to stocks, bonds, annuities or other paper assets. Others might suggest commodities, such as oil or gold. Exxon/Mobile’s recent quarterly profits posted over $68 billion and gold trading for more than $900 an ounce make both worthy considerations.

The most powerful financial asset is where most of our nation’s wealth is held — in real estate. Even with the recent correction in national values, there is still more equity in primary residences than all of the funds being held in 401(k) plans. Further evidence is the current value of the land and improvements in our great nation exceed the total capital value of every stock market in the world combined! Also consider that the majority of self-made millionaires in the U.S. did it with real estate investing.

Having been a registered representative with the NASD and a licensed insurance professional for many years, I absolutely advocate a well-balanced portfolio including stocks and bonds in conjunction with the proper insurance policies for risk and wealth management. But do not overlook the most powerful financial asset that every American should have — real estate.

Mark Gazzigli

Vitek Mortgage Group

Consider debt, equity instruments

Debt instruments are one good answer. The ability to borrow money to accomplish something now that you otherwise couldn’t currently afford has had a very powerful influence over the course of human history. Revolutions have been won, economies built and the dream of homeownership realized as a result of debt instruments.

Equity instruments are another good answer. Owning stock has had a great democratizing effect on the building of personal wealth. While stock market gyrations leave investors dizzy at times, there are few better prospects for the common man to secure his future and keep ahead of inflation than the long-term ownership of equities.

One asset class rises above even these, however. Economists call it human capital. Technically that’s the value placed on your ability to produce an income over your lifetime. In larger terms, it is the very lifeblood of the world’s economies. What each individual contributes either enriches or depletes both their own lives and the wealth of the society at large: the greater the value of our combined human capital, the greater the wealth of the world.

Yes, you are the most powerful financial asset. The rest are creative derivatives of the wealth created by billions of you.

Robert W. Elmer

The Real Estate Group, Redding

Protect yourself

My clients are usually taken by surprise when I tell them the most powerful financial asset is YOU! What else can make money in a variety of ways?

Whether it is blue-collar work, a white-collar job or income from investments, nothing else compares. When I ask someone If you had a money machine in your garage that made $40,000 a year or more for you, would you insure it? The answer is always Of course!

That leads to discussions about disability insurance (injury or condition that keeps someone from being able to work), life insurance (money for those who are left behind), health insurance (a human warranty program) and long-term care insurance (care for you when you can’t care for yourself). Most folks love their family and themselves enough to realize that sometimes unexpected events happen that can injure or kill their most important financial asset, and they choose to protect themselves accordingly.

Meet with a qualified, well-respected professional to review your needs. Most people spend more time planning for a vacation than their financial wellbeing. Be a leader and be smart, plan ahead for the unexpected.

Jeff Avery

State Farm, Redding

Vary your strategy

Over the course of your life, you’ll almost certainly have many different financial goals, and to help achieve them, you’ll need to use many different investments.

How might you target specific investments for specific goals? Here are a few suggestions:

To save for a home, you might want to use certificates of deposit (CDs) or short-term, investment-grade bonds.

To enjoy a long and comfortable retirement, you’ll want to accumulate savings in tax-advantaged vehicles, such as a 401(k) and IRA.

To save for college for your kids, you may want to consider a Coverdell Education Savings Account or a Section 529 savings plan, both of which offer a variety of investment options and tax advantages. Contributions are tax-deductible in certain states for residents who participate in their own state’s 529 plans.

These investments aren’t the only ones available to you. But they help point out the importance of identifying your various goals — and choosing the right investments to help meet them.

Scott Brown

Edward Jones, Redding

Each week the Record Searchlight poses a personal finance question to a panel of local financial advisers.

If you have a question for the panel or are a financial adviser who would like to participate in the panel, please contact Carole Ferguson, managing editor, at cferguson@redding.com or by phone at 225-8232.