Current and Future Financial Situation
Chapters in this video
- 0:00 Cash flow versus net worth fundamental distinction
- 1:57 The balance sheet and net worth formula
- 2:52 High income trap: Iris the investor case
- 3:35 Employer stock concentration and diversification
- 4:54 Tax loss harvesting and the one-year capital gains rule
- 6:01 Future income streams and portfolio heavy lifting
- 6:33 College, inheritance, and long-term care obligations
- 6:57 Rapid-fire exam recap
What this video covers
- Why cash flow measures money over a period of time while net worth is a point-in-time snapshot, and why the exam tests this distinction
- How a balance sheet works: assets minus liabilities equals net worth, and why heavy liabilities destroy investment capacity
- Why high income does not equal high investment capacity, and the exam trap of clients with massive debt relative to earnings
- What concentration risk means for employer stock holdings, and why diversification is the only suitable recommendation
- How unrealized losses create tax-loss harvesting opportunities, and the one-year threshold for long-term capital gains treatment
- Why clients in higher marginal tax brackets benefit more from tax-exempt municipal bonds and tax-advantaged account maximization
- How expected future income streams (Social Security, pensions, inheritances) and obligations (college, long-term care) affect risk tolerance and liquidity needs
Read the full lesson, free
This video's complete written lesson is free to read in the CertFuel app, no signup wall. The complete Series 66 course also includes adaptive practice questions and spaced-repetition flashcards.