OAK STREET ADVISORS
  • HOME
  • SERVICES
    • Financial Planning
    • Tax Planning
    • Fiduciary Investment Management
    • Small Business Planning >
      • Business Retirement Plan Advisory
  • ABOUT US
    • WHAT IS A FEE ONLY ADVISOR?
    • FREQUENTLY ASKED QUESTIONS
    • OUR TEAM
  • SCHEDULE AN INTRO CALL
  • BLOG
    • BLOG
  • CONTACT A FINANCIAL PLANNER
  • FORM ADV PART 2
  • IS A ROTH IRA RIGHT FOR YOU?

NEWS YOU CAN USE

The Perfect Time to Invest

6/1/2020

 
There’s an old story in the investment industry that may be true or may be just a parable--but it certainly is appropriate to remember when the stock market is panicking.

The story goes, a very smart advisor would tell each of the investors who opened an account with her the following:
“Mr. and Mrs. Smith, today we begin a long journey to build your financial future.  Everyone is happy and optimistic as we begin to build your wealth for the long term.  We have built your financial plan, and today, we begin to implement that plan.  Skies are sunny and waters smooth.

But there’s a catch! The day will come when the markets turn down and you begin to second guess all the work we have done.  You will forget about the long-term, and focus on the short-term turmoil in the markets. You will be scared, you will think me to be an idiot.  You will want to come to my office and throw a brick though my window.

And that is okay.  If it will make you feel better, please do it.  I will even give you the brick to throw. 

But first, when you have that brick in your hand, when you have taken aim, when your arm is cocked and ready to fling that brick-- STOP! Write a check for every penny you have and tie it to the brick.  Then you can throw it. 

Because that, my friends, will be the perfect time to invest!"
But wait--

While that’s a good story, and one we tell often, it’s not the whole picture. If you wait for the perfect time to invest, you’ll likely miss many, many, days, weeks, months, or even years of good growth in the market.

We believe a better answer to the “When is the perfect time to invest?” question is: “ASAP”.

The magic of compound interest works best for you many years down the road. Every day you delay is a day you put off that magic coming to fruition. Not to get into the math, but you can imagine that 21 years of compounding growth produces a higher number than just 20 years of compound growth. If you take the time to do the math, you might be amazed at what one extra year of compounded growth means in dollar terms.

And my answer of as soon as possible also comes with some conditions.
 
Get a financial plan.
Developing a real financial plan means understanding all, or at least most of, the risks equity investing presents. Knowing the correct asset allocation is paramount. Too little risk and you may have no chance of reaching your goals, too much risk and you’ll find yourself outside our window with a rock in your hand.

Having a real financial plan gives you discipline, and in investing, discipline is your friend. A real financial plan gives you confidence that no matter what happens in the short-term, you will be okay in the end.

A real financial plan makes life simpler. If you find yourself with extra money to add to your portfolio, you don’t have to reinvent the wheel or come up with some new idea. Your plan already shows you where your money should go. If stocks soar, your plan will tell you when to pull back; if stocks sink, your plan will force you to make the hard decision of “should I buy more”.

A real financial plan provides a more tax-efficiency investment strategy, which gets you where you want to be faster-- and with less risk. Investing with poor tax planning is like driving your car with the parking brake on-- it slows you down and ruins your car.

If you don’t have a plan, it’s unlikely you have done an adequate job of educating yourself about how markets and money work either.

Folks often fail when they follow a “get a hunch, bet a bunch” strategy. Sure, you hear stories of someone who bet all their money on some company you have never heard of and made a fortune. You have also heard stories of folks who won the lottery and became rich overnight; that doesn’t make buying lottery tickets a sound investment strategy.

So, while I love the story about the brick, I think it misses the bigger picture. Planning, and executing your plan, will create the perfect time to invest. Remember, it wasn’t raining when Noah built the Ark.

Comments are closed.

    Archives

    April 2025
    February 2025
    September 2024
    April 2024
    September 2023
    July 2023
    June 2023
    November 2022
    September 2022
    November 2021
    September 2021
    July 2021
    June 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    July 2020
    June 2020
    March 2020
    February 2020
    January 2020
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    September 2017
    June 2017
    May 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    September 2015
    August 2015
    June 2015
    April 2015
    March 2015
    February 2015
    January 2015
    December 2014
    November 2014

    Categories

    All
    401k
    403b
    529 Plans
    Annuities
    Behavioral Economics
    Bonds
    Budget
    Charity
    College Planning
    Credit
    Credit Cards
    Crypto Currency
    Debt
    Economics
    Estate Planning
    Federal Reserve
    Fiduciary
    Financial Planning
    Goals
    Gold
    HSA
    Income Tax
    Income Tax Planning
    Insurance
    Interest Rates
    Investing
    Investments Expenses
    IRA
    Jobs
    Life Insurance
    Real Estate
    Retirement
    Retirement Income
    Risk
    Rollover
    Roth IRA
    Savings
    Social Security
    Special Needs
    Stocks

    RSS Feed

Photos from archer10 (Dennis) 162M Views, Philip Taylor PT, mikecohen1872, cafecredit
  • HOME
  • SERVICES
    • Financial Planning
    • Tax Planning
    • Fiduciary Investment Management
    • Small Business Planning >
      • Business Retirement Plan Advisory
  • ABOUT US
    • WHAT IS A FEE ONLY ADVISOR?
    • FREQUENTLY ASKED QUESTIONS
    • OUR TEAM
  • SCHEDULE AN INTRO CALL
  • BLOG
    • BLOG
  • CONTACT A FINANCIAL PLANNER
  • FORM ADV PART 2
  • IS A ROTH IRA RIGHT FOR YOU?