Hello Candor Family!
I hope all of you are refreshed and renewed from the holiday season. If you are like me, it takes a week or so to get back into the routine after the welcome distractions of December. The New Year always gives me a fresh outlook. Instead of making resolutions, I like to come up with a vision for myself in the coming year. I usually assign words with significant meaning to the idea, and I write those words in places I can see them and be reminded of my vision. What about you? Shoot me an email if you have something that you do each year. I’d love to hear it, and I will even share my words with you.
I had a great aunt we called Aunt Flo who was incredibly pragmatic and encouraging at the same time. This meant that when we saw her (most often Christmastime) she would sit me down and one-on-one, she would quiz me about the details of my life and how I was doing in school, music, art, whatever. This would go on for fifteen minutes or so, and then she would say the phrase I will never forget, “I like how you’ve started out.” This was usually followed by comments to coax me on to do well at whatever I was doing and set my goals high. I always felt like she meant what she said. Today when I look back on those moments, I am grateful for her gift of speaking courage into me. Her believing in me helped me believe in me, too.
Today I’d like to encourage you in the same way. “Starting out,” as Aunt Flo called it, can be an intimidating thing--like going to a place you’ve never been before or experiencing something for the first time. People feel this way about investing. Especially younger people or folks who have put it off and feel like they’ll never catch up to where they should be. Usually, they are comparing themselves to others, like we do in the gym. And just like that, we get discouraged and end up letting the little red guy on our shoulder talk us out of it. So as a New Year’s gift to you, here are some tips to help everyone start making the right moves to become financially healthy.
- Do something. Just make up your mind and do it. Say to yourself, “<insert name here>, I’m going to open that account up next Wednesday afternoon and set it up for direct deposit.” Pre-deciding and writing down your decision is ninety nine percent of getting it done.
- Start small and work your way up. Nobody squats 450 lbs their first day at the gym. Start with 50 lbs (or in my case, the empty bar). But nobody grows without increasing either, right? Add weight to your savings as time goes by. Most modern 401(K) plans have a feature that allows you to do this annually. Saving a little more every year makes an exponentially large difference in your eventual outcome.
- Don’t overthink it.Ever get to the edge of a high dive and stop to think about the jump? The longer you wait the worse it gets. If you’re worried about risk of losing money, just pick a highly rated ETF or mutual fund that has a low risk score and start with that. Or if you want to earn more money over time, and have plenty of time ahead of you, pick a riskier growth stock fund. To me, it doesn’t really matter what you invest in as long as it’s (a) diversified and (b) a good fit for your needs (think risk, liquidity, and time horizon). If you are investing in an employer plan like a 401(K) there should be basic funds available that fit your time horizon. If you are stuck, just call the number at your plan and ask them for guidance.
- I think the number one reason people don’t invest is that they don’t believe in themselves. They don’t think they can afford it. They don’t think it will make a difference. They don’t feel capable or smart enough to do it. Sadly, some don’t feel worthy. There are other reasons, but these are, in my opinion, the ones that disable most people from starting. And this discouragement of mind is the very thing that robs us of our most precious asset, time. When we tell ourselves “I’ll start next year,” we tend to get comfortable in that rut. Ten of those go by and now we must double our savings just to catch up. Those fears get more ingrained as time passes, making it even more difficult to start.
- Automate it. Make it small enough to not miss and make it automatic. This makes doing the right thing easy and the wrong thing hard.
- Get a buddy. Find someone you can hang with and has similar interests as you and make it a point to talk about your investments and what’s working. People who do this learn from each other and enjoy it more, and when things get tough, they may help each other stick to it. The worst game of golf I ever played was when I shared my cart/tee time with a former pro. So be sure to yoke up with someone who can stay with you.
- The thing about investing in securities is that about one third of the time we’re losing money. But the other two thirds have historically made it worthwhile. Don’t worry about the down times. Instead, think of how much more your money is accumulating with each dollar invested. This also means that we shouldn’t chase sparkly objects when they come into view. Stick to the basics at first, and even if others seem to be going “to the moon” with an investment, just stay on terra firma. It’s warmer down here and there’s plenty of air to breath. And last time I checked everyone who visited the moon didn’t stay very long.
If you are reading this blog and feel inspired to help someone else get started, share it with them. If you are one of those people who feel they haven’t done enough and are worried about retirement, call a trusted financial advisor. Or if you don’t have one you feel comfortable talking to, I’m always happy to help by answering questions and offering complimentary advice to help you get your start. Maybe the thing that needs to be “started” is a plan. If you’re nearing retirement age and have concerns about affording your lifestyle or outliving your money, a financial plan that includes goals and compares different scenarios will help you feel more confident in what you can do or what you should do.
2023 will be a challenging year for us all. Inflation is still a problem, and the Fed is resolute in suppressing it. On the bright side, wages are higher than they’ve ever been. Prices are on the rise, but many of us have the ability to save still. In every market cycle there is opportunity, but you don’t catch fish without getting a hook wet. This may indeed be one of the best times we’ve been given to start investing gradually.
I hope this has encouraged you and I pray that you and your loved ones get a great start to this year, no matter what your visions are.
Always with Candor,
*The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
*The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.