Breaking Through the Mystery of Investing

Investing

In this episode, your Money Guys are breaking through the mystery of investing so you can start putting your money to work for you. Why? It’s the fastest way to grow your wealth.

Brian and Bo hate to see so many individuals out there put off by the idea of investing, so they’ve decided to show listeners how easy it is to get started with investing, and explain why you should.

If the idea of investing intimidates you or you get anxiety thinking about putting your money into the market, you need to listen to Brian and Bo’s advice on traditional investing. It could mean the difference between having a five-figure portfolio or six-figure portfolio in retirement.

5 Tips You Need to Know About Investing

Brian breaks down the simple facts of investing in 5 tips:

  • The Fix Is In: Brian explains that if you invest in the market for just one year, you have a 75-80% chance of making money.
  • Be Patient: If you invest in the market for 7-8 years, you’re almost guaranteed to make money. Investing for the long-term drives up your potential for success.
  • Have a Reasonable Expectation: Brian reminds us that no one has a crystal ball when it comes to forecasting the markets. It’s important to have realistic expectations and not buy into hype. Investors need to realize there’s no “best” time to get into the markets, and that you shouldn’t be so scared of investing that you don’t take action.
  • Don’t Swing for the Fences (All the Time): The worst thing you can do as an investor is be over-confident of your risk tolerance. When the market is performing well, it’s easy to think we should invest more, but it’s important to have some liquidity. Keep the future in mind as well: just because life is good now doesn’t mean it will be in 5 years.
  • Understanding Your Emotions: Brian goes through the range of emotions investors often feel throughout the market cycle: from being overly optimistic, to being fearful and desperate. It’s crucial to understand your emotions in relation to the market to recognize opportunity.

Brian also mentions how powerful investing can be when you compare your net worth with your earned income. If your net worth has gone up more than your earned income, that means the value of your assets is appreciating quickly, and you’re on the right track to financial independence.

Basic Investment Terms to Know

Brian and Bo quickly go through some basic investment terms you should know before putting any money into the market.

  • Cash and Equivalents: Checking accounts, savings accounts, CDs, money market accounts – anything FDIC insured that won’t lose value and is secure.
  • Bonds: A loan you make to another entity, corporation, or government. Essentially, you’re letting this entity pay you for the use of your money, and in turn, they’ll pay you interest.
  • Stocks: This is when you buy equity into a company, which means you have ownership in the future profitability of that company.
  • Mutual Funds: Offered by an investment company, these invest in a basket of stocks, bonds, and/or cash. Instead of buying individual stocks, you can invest in a mutual fund that owns shares in many different companies.
  • Exchange-Traded Funds: Similar to mutual funds, ETFs give you a wide exposure to a number of different holdings. These trade like stocks and are more tax efficient than mutual funds.

Lastly, Brian advises that people should also consider tax and risk diversification — you don’t need to invest all of your money wildly. Invest the right way with these simple tips, and you’ll be well on your way to financial independence.

The Financial Decisions to Get Right at Every Stage and Age

Financial Decisions

This week, your Money Guys were joined on the show by special guest Alan Moore to discuss the various financial decisions that everyone needs to make at different stages and ages of their lives.

Alan is the co-founder of the XY Planning Network, the leading organization of fee-only financial advisors that specialize in working with Gen X & Gen Y clients. He’s also the President of Serenity Financial Consulting, a fee-only RIA and location independent financial planning firm. He currently lives in Bozeman, MT so that he can hit the slopes on powder days.

In this episode, Alan, Bo, and Brian each walk through some pitfalls to avoid, blind spots to be aware of, and solutions you can implement with your personal finances.

Money Matters to Think about When You’re in Your Teens and 20s

Alan takes on what younger generations should watch out for and think about. For those in their teens and 20s, he says to take your financial decisions seriously.

This decade isn’t a “throwaway,” and it’s never too early to think about developing financial independence and investing in your future. The decisions you make now do matter. Alan also has a few suggestions for people who are just starting out:

  • There are a lot of big things and changes happening right now — but don’t forget about the little things. Don’t let small mistakes trip you up and hinder your financial progress!
  • Invest in financial assets.. and your own skills, knowledge, and abilities.
  • Don’t be afraid to ask for what you want — but understand you’ll need to do your homework before you do. Don’t plan on getting what you ask for if you don’t put in the work first.

Keeping on the Right Financial Track in Your 30s and 40s

Bo picked up after Alan to help those at a little later stage in life — those who are in their 30s and 40s.

If you’re in this age group, you’re still young! But you’re not “entry-level” anymore, and it’s likely that this stage is bringing new experiences and life changes to you.

Bo brings up some common pitfalls that people in their 30s and 40s need to watch out for, including issues with your investment portfolios, spending temptation and lifestyle inflation, and simply forgetting to re-check your financial to-do list after you go through some big life milestones.

Finishing Strong with Your Financial Decisions After 40

Brian then addresses the over-40 group and the financial decisions they need to think about and the blind spots to be aware of.

The biggest issue? Time flips on you, and it’s no longer an advantage but a liability. That doesn’t mean it’s too late to take action, but it does underline the fact that you do need to jump on your financial goals if you haven’t gotten serious yet.

Remember, “someday” is not a day of the week. Think about these things, and if you need to take action on anything, do it today:

  • Understand your risk capacity. Even if you still feel comfy with risk, you may not realistically be able to handle swinging for the financial fences anymore.
  • Organize and tighten up your finances. Don’t get sloppy, and don’t abandon a plan of action at the finish line!
  • As much as you don’t want to think about it, you need to understand your mortality. Even if you feel young mentally, you can’t pretend you’re not aging at all. (Sorry.)

No matter what your stage or age, there are financial decisions to think about — and to get right. It’s never too early (or too late!) to take smart action and improve your financial situation.

So no matter what group you fall into, keep up the good work in avoiding pitfalls and making the right money moves.

Want help with this? You can always reach out to financial pros to help get you on the right track. You can also email your Money Guys at brian@money-guy.com and bo@money-guy.com — and you can email our special guest, Alan Moore, at alan@xyplanningnetwork.com.

 

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