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Brooke, a Goldman Sachs Ayco coach for 3 years, received a call from a client who wanted to ensure they were on track for retirement.
“It’s common for people to be so focused on one specific goal that they inadvertently overlook more urgent issues or how their finances tie together,” Brooke explained. With that in mind, she began this particular conversation by reviewing the individual’s full financial picture in order to pinpoint potentially conflicting goals or priorities.
It quickly became clear retirement planning was not the client’s most urgent need. The caller shared they had about $20k in credit card debt with interest rates around 26%. Such a high interest rate raised an immediate red flag for Brooke.
She pivoted the conversation to discuss the concerns this debt—and high interest rate—posed for the caller’s financial wellness. She explained how this could delay both their short- and long-term goals.
“They asked me to help analyze the impact of their interest rate and the typical returns earned on their retirement accounts. After our discussion, they agreed that debt management was their most pressing priority.”
Brooke helped them by working together to determine the best debt strategies for their situation, including debt pyramiding.
Debt pyramiding is the process of outlining your debt and determining a payment schedule based on paying off the highest interest debt first. Here are the steps to this process:
After going over this with the client, Brooke said: “They decided to start putting their extra cash flow toward paying off credit card debt. Once that’s paid off, they’ll be putting the funds toward retirement savings.”
Brooke and the caller also reviewed budgeting strategies to help develop healthy spending habits and avoid accruing more debt. They developed a plan the client felt confident in and plan to touch base regularly to make sure they stay on track, and to address any issues if they arise.
A couple who, like many others, needed help balancing several different priorities worked with Chris, Goldman Sachs Ayco coach of 3 years. Chris helped them make the financial decisions that were right for where they were on their financial journey.
The couple had recently started saving up extra cash, which led to the unavoidable question of how to invest the new funds. “A mentor of mine loves to rephrase this very common scenario of accumulating more savings by saying, ‘what should you do with your next dollar?’” Chris said.
First, he helped them outline how much money was in their emergency fund and how much they wanted to have saved. Together they quickly concluded this fund should be kept in a high-yield savings account. This savings vehicle also became the home for the family’s post-pandemic vacation budget they plan to use soon.
As they branched into their longer-term goals, Chris educated them on stock market investment options. The first of their goals was about 10 years away: to purchase a home in the suburbs.
“We used Goldman Sachs Ayco’s Risk Tolerance Assessment to find an appropriate stock-to-bond ratio (which turned out to be 50/50 for them) given the timeframe and nature of this goal,” Chris explained. “This 50/50 ratio means they were comfortable with having half of the account subject to the ups and downs of the stock market, while the investment strategy for the other half would be focused on stability and subtler shifts in value.”
When they brought up their goal to gift investments to their son, Chris happily talked them through that, too. Since the goal had a flexible and far-off deadline, he talked them through the potential rewards of the more aggressive investments with this account.
With Chris’ personalized guidance that considered their full financial picture, this couple developed a plan that balanced risk tolerance and intended timeframes for all of their goals.
Goldman Sachs Ayco coach Brooke had an appointment with a client who wanted to discuss investment strategy. This client was hoping to invest idle funds that could be better used toward her goals.
Brooke recalled, “As we reviewed her finances, I found out that she had about $10k in cash and wanted to invest all of it.”
When Brooke asked what her financial goals were, she shared that her only potential goal was to buy a home in the next year or so. Brooke explained to her the risks of investing money she needs for short-term goals. This wasn’t something she had previously considered.
They also discussed the importance of an emergency fund to cover unexpected expenses—especially when buying a new home. After this discussion, she decided to put the money toward an emergency fund.
She then decided to put any free cash flow from future paychecks into an investment account. After this decision, they reviewed different investment options and how they could be utilized in her situation. Brooke helped this client maximize the value of her pay and benefits for her specific situation, which helped her better prepare for her financial goals.
If you have Goldman Sachs Ayco as a benefit, reach out to a coach with any questions you have for personalized, confidential guidance. Coaches are available when it’s convenient to you, at no-cost-to-you.
If you have Goldman Sachs Ayco as a company benefit, register, log in or download our Goldman Sachs Wellness app to learn more about this and other financial wellness topics.
Updated for tax year 2022