馃攳
Investing Time Horizon explained by a Financial Advisor - YouTube
Channel: ClientFirst Strategy
[0]
- [Mitch] The truth about bear markets?
[2]
Sometimes bear markets
will be you best friend,
[4]
and sometimes bear markets
will become your worst enemy,
[8]
and that has to do with Time Horizon,
[11]
and that's what this video is all about,
[14]
Let's get into into it.
[16]
(upbeat electronic music)
[19]
(subway trains passing)
[20]
(upbeat electronic music)
[23]
(upbeat electronic music)
[29]
And we're back. If we
haven't met yet my name is
[31]
Mitch Goldberg, I'm a financial
advisor and business owner.
[35]
This YouTube channel is
about financial education.
[38]
So there are times when a bear
market is your worst enemy
[40]
and a bear market could also
be at times, your best friend.
[43]
So, let's talk about that
because that has to do with
[46]
Time Horizon and Time
Horizon has to do with
[49]
how aggressive or
conservative you could be
[52]
with your investments.
[53]
So, there are three main
financial goals that I
[57]
help clients with. There are
many financial goals, but
[61]
the three most popular ones
are: Saving for a down payment
[64]
to buy your first home,
Saving and investing for your
[67]
child's or children's
education, and the last one
[70]
the universal goal is: Retirement.
[72]
So, they all have something
in common because you have
[76]
a start date, when you start investing
[78]
and you have an end date
when you reach the goal.
[81]
The first major goal is
saving for a down payment.
[84]
Now imagine if you've
put some money aside,
[87]
you've put money in your savings account,
[89]
and your checking account,
and you've invested
[90]
some money outside of a 401k plan,
[93]
because presumably your 401k plan is
[95]
going to stay where it is,
you're not gonna use that money
[98]
to put toward a down
payment for your fist home.
[100]
So it takes a lot, and I understand this.
[104]
My wife and I, you know a long time ago
[106]
we bought our first home as well.
[108]
It takes time, you have to sacrifice,
[110]
you have to save, put away money.
[112]
So you finally get to that point,
[114]
imagine how you'd feel if the
money you had in the market
[117]
was still in the market right before
[119]
you're about to write your check
[120]
for your down payment.
[121]
And then we go into a bear market like
[123]
2007 to 2009, when the markets went down.
[126]
The major averages went down 50% or more.
[129]
How would that affect
your ability to purchase
[133]
the home you want? Okay -
that would probably have a
[135]
very bad affect, a very negative affect
[137]
and you would be kicking yourself for not
[140]
taking that money out of the market,
[143]
so my advice to clients
who go through that is
[146]
to have your stock money out of the market
[150]
and into cash equivalents
like CD's money markets,
[153]
savings accounts, checking
accounts, that's where your
[155]
down payment should be
well in advance of the time
[159]
you even decide to
purchase your first home.
[161]
So, popular goal number two
[163]
is saving for your
child's College Education.
[166]
So, here's a scenario: You have a baby,
[169]
wonderful time of life,
and you decide to open up
[172]
a 529 plan or also known
as College Savings plan
[175]
for your new baby. And,
if we have a bear market
[179]
and stocks go down, and you keep investing
[181]
month in, month out the same dollar amount
[184]
It means you're going to be buying
[185]
more shares for a lower price
[189]
of the mutual funds in the 529 plan.
[191]
And that is a great thing, good
for you, good for the child.
[195]
Because that means when
the market does recover,
[198]
your money will grow that much quicker.
[200]
And if you think of it
this way, if the child is
[203]
9th, 10th, 11th grade - that means you're
[206]
thinking about college
for your child, the goal
[208]
is getting very close
and believe me your child
[211]
is probably thinking about
college very much too.
[213]
At that point - 9th, 10th
grade, you really wanna be
[216]
ratcheting down the stock
risk, the stock exposure
[220]
and upping your exposure
to money markets and
[223]
fixed income funds.
[224]
Why? Because, if you have
a severe bear market,
[227]
and you're fully invested in
stock funds in the 529 plan,
[233]
and we have another 2007
to 2009 style bear market,
[236]
conceivably you could lose
50% or more of the assets
[242]
in that account.
[243]
How would you feel about
that? And, that would really,
[246]
you know, take away the money
that you had for college.
[249]
So, you want to avoid that
because like I said earlier,
[252]
it's your Time Horizon that
dictates you risk tolerance.
[256]
So, you have less time
to, uh, reaching the goal,
[259]
you have to take less risk.
[261]
Goal number three, it's the
universal goal it's: Retirement.
[266]
Everyone's saving for
retirement, or at-least everybody
[268]
should be saving for retirement.
[270]
So, if you're 20, 30, 40 years
[272]
away from your retirement.
[274]
Maybe even more, you know
life spans are longer,
[276]
people are living longer,
[277]
so if you're 22, it's
quite conceivable that
[280]
again if you're 22 today
[281]
that your retirement date
might not come until, you know,
[284]
you're 72, or later, Okay
it also depends on how well
[288]
you did in preparing for
retirement, so the less preparation
[292]
you do when you're young,
it means the longer you're
[295]
probably going to have to
work when you're older.
[297]
But having said that, if you're young,
[299]
and that's debatable what age is young,
[301]
but if you're got 30, 40, 50,
[303]
20 years, even 15 years
away from retirement, you
[306]
could afford to be more
aggressive with your investments
[309]
especially if you're 30 or 40
years away from retirement.
[312]
And, you want a bear market,
quit frankly a bear market
[316]
is your friend, that means
you're borrowing more shares
[318]
in your 401k plan of
the same mutual funds at
[321]
lower prices, so when you
do ride the market back up
[324]
you will really see you're assets grow.
[326]
Now of course if you're, let's say,
[328]
10, 15 years away from
retirement, you might
[331]
not be fully invested in
stocks but maybe you'll be
[333]
60% stocks,
[334]
40% bonds, thereabouts depending on
[337]
your individual risk profile,
[340]
and maybe when you're five years, 10 years
[342]
away from retirement or
even closer, you're going
[344]
to really start to ratchet
up the fixed income and
[347]
money market exposure, and
reduce the stock exposure.
[350]
It's different for everybody
and I'm not saying you should
[352]
be fully in cash when you
hit that retirement ramp,
[356]
because you could still
conceivably have 20 or 30 years
[359]
to live after that, so
you still need assets in
[362]
the market to continue to grow in order to
[365]
potentially stay ahead of
inflation, and make sure
[369]
to help you potentially have more money,
[372]
for your later years in retirement.
[374]
I hope this video helped you
out with your understanding of
[377]
investment Time Horizon.
[379]
If it did, please give it a thumbs up,
[380]
and subscribe to my YouTube channel.
[383]
If you're in the market
for a new financial advisor
[385]
my contact information can be found
[387]
(upbeat electronic music)
at: ClientFirstStrategy.com
[389]
Give me a call, let's talk about it,
[392]
and we'll see if we're a good fit.
[393]
Thank You so much for watching
(upbeat electronic music)
[396]
and until next time, I'll see you soon.
[398]
(upbeat electronic music)
[401]
(upbeat electronic music)
[405]
(upbeat electronic music)
[408]
(upbeat electronic music)
Most Recent Videos:
You can go back to the homepage right here: Homepage