Prospects and clients can be like Goldilocks. “the market is too high. The market is too low.” There’s rarely a time it’s “just right.” Here are twelve reasons now is the time to act.
1. It’s never too early to plan for retirement. It seems so far off, especially when you are young. The pandemic has taught us retirement savings aren’t just a package labelled “Do not open until Christmas.” They can be an emergency cash reserve that can be tapped or borrowed against. But it won’t be a pool of assets unless you start filling the pool.
2. Financial independence is the goal. Many people dream of a life of leisure. Others dream of starting their own business. Being your own boss. This dream requires “a number.” It’s the amount you need to quit your 9-5 job. Gallup did a survey: In 2016, about 49% of Americans bought lottery tickets. Saving and investing offers greater probably and more control of hitting your number.
3. Need a new view of Long Term? Remember college. Long term sounds…so long. Think about college. In freshman year, it looked like it would be forever until you earned your Bachelors degree. At graduation, you remarked on how those four years flew by.
4. I don’t want to tie my money up. When interest rates were high, many investors didn’t buy long term bonds because they didn’t want that money to be inaccessible. Most securities have an active secondary market. Also, if you don’t what to tie it up, what’s your reason? What are you intending to use the money for, near term?
5. What’s the alternative to stock market investing? It’s important to be diversified, but avoiding the market doesn’t make lots of sense. Are you going to buy real estate instead? Artwork? Diamonds? Many other asset classes come with significant drawbacks. Liquidity and transparent markets are a couple.
6. There are many markets. “The stock market is too high.” Which one? There are several indexes and markets in the US. There are many around the world. There’s often a rally taking place somewhere.
7. Get paid to wait. It’s the logic behind total return investing. Buy a stock that pays a dividend. You get paid while you hold it and hopefully you sell at a profit later. Consider reinvesting those dividends. Consider investing in companies you send checks to when you pay your monthly bills.
8. Albert Einstein and compound interest. He said: “Compound interest is the 8th wonder of the world. He who understands it, earns it; he who doesn’t, pays it.” There’s logic in making good investments and leaving them alone.
9. Value, growth and the Holland Tunnel. There’s always been debate over growth vs. value investing. Each has it’s proponents. You know markets move in cycles. A NYC advisor used the analogy, “It’s like being in Holland Tunnel traffic. You think the other lane is moving faster, then you pick up a bit of speed. By the time you leave the tunnel, you and the other car are in about the same position as when you entered.”
10. Buy when others are selling. The Dogs of the Dow strategy is based on the idea you buy the highest dividend yields stocks in the DJIA and reconfigure the list periodically. Higher yields often imply investors are running away those stocks. Over time, the problems they faced often find solutions.
11. Pay yourself first. It makes more sense to consider saving your first priority, not an afterthought for the money you have left at the end of each month. That money should be put somewhere.
12. What’s the best stock you ever owned? Almost every investor has one. If they are down on the market, ask if they are intending to sell their position. Absolutely not! Is often the answer. They will tell you how great the company is and how management is so smart. Assuming it’s not a concentrated position, you might find they will talk themselves into buying more right now.
People often look back and wish they took action. Part of an advisor’s job is encouraging them to take responsible action now.