The markets do not care what stage of life you are in. I know that sounds funny, but we can sometimes think we should invest differently because of something going on in our own life.
The old school big firms in the financial industry make their stock market money one way. By processing transactions. They don’t care if you are successful as long as you do something and pay them a fee or commission.
Your Savings Target is the amount you want in savings so by definition, anything above this amount should be invested in your Long-Term Portfolio.
When tying your future wealth to something through investment, be sure what you are doing has always worked in the past. Don’t be distracted by the odd strategy or “opportunity.”
Things will improve, we just don’t know how. That’s what I mean by being optimistic and this is most important when markets crash.
I’m so glad that today’s culture has finally given a name to something that has killed many investors in the past. FOMO. When you hear about the fear of missing out, doesn’t it make you realize that this is something you should not be concerned with?
We’ve all heard that we should be diversified, but what does that mean? It means to own a lot of things that you expect to do well over time but that don’t always do well at the same time.
Here’s how most people invest: Act on impulse, React to things they see in the news, Do what their friends are doing, Do their own research and convince themselves they can see what the future holds, Bet their life savings on tips and hunches. Don’t be like most investors!
Your savings balances may fluctuate a lot during the year depending on stock vesting, property or income tax payments, and many other things. But your Savings Target should not fluctuate.
Life Happens. No matter how much we plan or how much confidence we have in the future, it almost never turns out exactly as we expect. It might be fun to say you plan to die with nothing in your bank account but it’s not realistic.
Because we never know what the market will do in the short-term, we should not have any money invested that we plan to spend in the next 5 years.
At least once each year you will likely experience some big financial change. It could be a large stock award or having a baby. Or it might be missing out on a bonus round or a major repair on your home.