Walking into a grocery store without a plan (or a list) can be a recipe for disaster. They say never go to the supermarket on an empty stomach, otherwise, you will select unhealthy items or just grab anything you see on the shelves. The same can be said for investment planning. There are so many choices nowadays that the task can seem daunting and even dangerous. TFC is here to pick out the right products for you. You have worked hard for your money; it is of the utmost importance that we ensure if it is invested properly.
Investment planning is a broad term. There are so many mutual funds, exchange-traded funds (ETFs), individual stocks, bonds, certificates of deposit (CDs), annuities, options, sectors, styles – the list goes on! While all of these can be useful tools in our toolbox, the priority is understanding YOUR goals. Once we have an understanding of how you want your money to grow and your risk tolerance, TFC can go about the business of researching and selecting the right investments.
It is often wise to delay gratification. It does not sound exciting to sock away more money for tomorrow, but that is the beauty of compound interest, or ‘compounding returns’. The sooner you can get your money invested and working for you, the more time you allow for it to grow. It is time in the market that largely determines your investment returns, not timing the market. Over a 20-year period or longer, the S&P 500 has generated a positive return 100% of the time with data going back to 1926. While nothing is certain going forward, the odds are on the side of the long-term investor.
At TFC, we believe in saving and investing for the future in a savvy way. Taking advantage of the employer 401(k) match is a great way to start investing. Other useful methods include funding a Roth IRA and contributing towards a Health Savings Account (HSA). But those are just the account types, they are not investments. Think of it as a house – the account type is like a house, but it is your responsibility and decision of how to fill that house with the furniture (i.e. the investments). Let’s sit down and talk about how we do that.
TFC is focused on goals-based and risk-based investment planning. For younger investors, this often means a more aggressive portfolio mainly of stock funds, both U.S. and international. For those near or in retirement, it makes sense to hold less risky investments like bonds, CDs, and even an annuity. We believe in low-cost, diversified portfolios to reduce risk.
Another tip – Creating an automatic investment plan can go a long way toward building smart habits. Like a monthly BillPay from your checking account, we can direct a certain amount each month or quarter to automatically go into an investment account. The ‘set it & forget it’ approach is shown to work very well. Another prudent saving & investing idea – each year plan on contributing a little bit more to your investment accounts. Using these wise strategies, you can quickly be on the path toward your financial goals.
Here’s the point:
- Investment planning starts with determining your goals and risk tolerance.
- TFC recommends funding tax-advantaged accounts as a good first step.
- Younger investors (those with a higher risk tolerance) may want to favor stocks, those approaching retirement should invest more conservatively.
- TFC is here to research and select the optimal portfolio of investments tailored to you.
Action Items:
- Let’s talk about how to get started investing. Or you may need to review your current strategy – let’s sit down and review if you are on the right track.
- Set up an automatic investment plan and take the ‘set it & forget it approach’ for the best chance of long-term success.
Photo by Drew Beamer on Unsplash