The Setup:

On this episode, we share five commandments that should be written on stone tablets in your retirement plan.

Click the timestamps below to skip to a specific topic in the episode.

The Combination and Key Points: 

On this episode of Unlocking Your Financial Future, we share five financial commandments you should be following.  We’ll go into each one in detail on the podcast but here’s a rundown of all five.

1) Thou shalt not compare your investments to the stock market without the proper context.

If you’re invested conservatively, then you shouldn’t get upset if your portfolio doesn’t do as well as the market as a whole. That’s the trade-off for having less risk.

But if you’re exposed to big downturns and still not getting the full upside, then you likely have a problem that needs to be addressed.

If you dissect the S&P, it has five companies that make up almost 25% of that index. Those are the big tech companies, so it’s not really a true comparison of how you are invested.

2) Thou shalt not give up before giving your strategy enough time to play out.

Some people push the panic button too quickly and allow fear or greed to cause them to make a bad decision. But if you have a defined strategy that’s been designed to work over time, you’re much less likely to make an unfortunate emotional decision.

“It’s not a get-rich-quick scheme to jump in the market and expect to double or triple your money overnight. It takes time,” said Ben.

It can take 12 to 24 months before we can see what a portfolio will do.

“You’re hiring us to build a plan for you that can give you great security over your lifetime and predictability over your lifetime,” said Ben.

3) Thou shalt not chase big returns too late in life.

If you’re in your 50s or 60s, it’s probably not wise for you to try to achieve the same investment returns that you enjoyed in your 30s and 40s, because you don’t have a long enough timeline to justify the risk that often comes with achieving those returns.

“With big returns, you have to take big risks,” said Ben. But a big swing in the wrong direction can be very detrimental if you’re near or at retirement.

On the other hand, some people are too conservative and don’t want any risk. But we can explain why there is good risk we can take.

4) Thou shalt not ignore costs and fees.

Investing is never free, but the amount you pay can vary from one place to the next. Many investors overlook those costs and focus solely on returns.

There are fees associated with investing, and we are happy to acknowledge what those are. We encourage prospective clients to see multiple advisors and compare us against them and their fees. We have nothing we try to hide and want to be very transparent.

5) Thou shalt not overlook the importance of rebalancing and diversifying.

Diversification is the main way we can handle big swings in the market. There isn’t a way to avoid them at all costs. If one sector, such as travel or oil and gas, takes a beating, we can rebalance allocate money into different sectors.

To hear more, you can listen to the full episode or use the timestamps below to find a specific segment.

[2:36] – Thou shall not compare your investments to the stock market without the proper context

[5:13] – Thou shalt not give up before giving your strategy enough time to play out.

[7:15] – Thou shalt not chase big returns too late in life.

[9:08] – Thou shalt not ignore costs and fees.

[10:37] – Thou shalt not overlook the importance of rebalancing and diversifying.

Thanks for listening to another episode of Unlocking Your Financial Future. We’ll talk to you again next week!


 

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