If a potential client completes the readiness exercise, then a very basic financial planning form can be sent to them prior to an in-person or video appointment, the paper said. By using the form, also included in the paper, both the client and the advisor can analyze and adjust the inputs together. A surplus of assets would be required to support investment in stocks, with their inherent risk, the paper said, but if the surplus is not positive, then 100% fixed income is the investment recommendation, with a focus on debt reduction first.
“The best fixed income investment is paying off the negative of high interest credit card debt,” the paper stated. But after that, Series I Bonds, to the full $10,000 per year per person maximum, are the best investment option, as they’re backed by the U.S. Treasury and currently offer more than 7% interest that will be adjusted for inflation going forward. “For people of modest income, a combination of Social Security and an annual investment of up to $10,000 per year in I-Bonds should suffice to finance a comfortable retirement without any significant risk and without any special tax-deferred retirement accounts,” the paper said.
Overall, the paper recommended new investors of limited means restrict their investments to stocks, bonds and cash assets (defined as inflation plus a small pre-tax premium). In stocks, they should stick to broadly diversified, low-cost index funds, with fees and other expense rations no greater than 0.10% annually, the paper said. ETFs work, too, if costs are similarly low.