Today we are jumping into three different myths and mistakes that we see very often in investing. We talk through why they are believed to be true but what exactly makes them wrong. We also dive into what way we should think about these things to make better decisions in the future.
Today we are jumping into three different myths and mistakes that we see very often in investing. We talk through why they are believed to be true but what exactly makes them wrong. We also dive into what way we should think about these things to make better decisions in the future.
Hey guys, welcome to an episode of the modern outlook Podcast. I'm Eddie Thomas. And this is brought to you by wealth management services in Hershey, Pennsylvania, and today's episode, today's episode, I think we're gonna jump into busting financial myths and mistakes that people make, we're gonna go through three of them, give you a quick rundown of each, and just try to put us on a better path going forward, kind of make you aware of some of these things and how to avoid them and how to think about them. And I think it's important. So we'll have a couple of these. But let's jump into three of them right now. So this first one, Myth number one, this first myth is when people say I don't need to save for retirement right now. Now, there's a very small portion of the population that this is actually true. But for nine out of 10 of us, it's not we do need to save for retirement. And whether you're 20 years old, 30 years old, 3540 5055 60, even you need to save for retirement. And the reason being, and especially, we see this a lot with the younger investors that we kind of come across, because retirement planning and saving is just so far off the radar that you don't even think about it. It's one of those things where you're your mid 20s, or young 30s. And you're looking you have all these bills, you have a mortgage, you have a car payment, you have student loans, you have credit cards, you have all this stuff that you're still getting used to. So the last thing on your mind is saving for retirement. And then the flip side of that is when you're 4550 55, maybe 60. And you think, Okay, I've done enough, I can just let it ride or I don't need to add anything more to retirement, this should be enough, I kind of want to enjoy the money I'm making. Now. I want to spend it, I want to take trips. And there's a good happy balance to all of this. But the reason why it's a myth and nine times out of 10 You need to continue to save money for retirement is because one unless you have a pension, no one's saving it for you. So deciding not to save money for retirement is pretty much saying in the future, I don't care if I have enough money to live in retirement. I want to live today. And while yes, today, that is the easy choice to make tomorrow. And more importantly, in retirement, it's not because then you see what happened over all those years of not saving the other side of it. And the younger you are the more of an impact this has on you is you give up the compound interest that you get when you save from retirement. If you put an X amount per month per year, and you just let that ride, you don't do it thing to it compound interest depending on your investments, as long as you're invested in something that's right risk level for you. So why did you use the s&p 500 for an easy investment. If you just invest in that continuously, there's going to be a point where you build enough or compound interest really starts taking into consideration really starts ramping up the ability for your dollars to make you money when you don't have to do anything, because you've already put all the work in. And that's what retirement saving ultimately is, is just letting compound interest do its job over and over and over year after year after year. You can't save enough cash to save for retirement. But you surely can invest enough cash because of compound interest. So when you're saying I don't need to save for retirement right now, it's pretty much saying I'm in a comfortable spot, compound interest will take me there. And that that'll get me there alone. And a lot of times it won't, because you additional contributions to your retirement account is what helps that compound interest as well. If you have $100,000 saved, you're adding 10,000 A year and you make 10% on your investment, you automatically make 10 10,010% of 100,000 10,000. And then you add another 10. So in one year, you went from 100 to 120. Because you invested 10. And then you gain 10 in the market. And then that works. And that same next year, you have that 120 working for you and you're still adding that next 10. So now your 10% if you do it again in the market, you have 12,000 coming into plus another 10,000. So right there, you're already getting more on the interest side, you're still contributing your time, and you could see how that would ramp up over time when you get to 131 4150. So the idea that I don't need to save for retirement right now, there's no more important time than right now because you need as much time as possible for your money to earn compound interest as you possibly can. And the only way you create that much time is starting today or starting tomorrow, but starting as soon as possible. So that's Myth number one don't need to save for retirement. Myth number two, when people think I need a lot of money to invest, that's simply not true. That's simply not true. And I understand when you look at people's returns and they have they have what is deemed to be a lot of money in your eyes and If they have the return of an 8%, or a 10% year, and they make this much money on their investments, well, the only way they get to that point, outside of inheritance outside of stuff like that is you just start small. Everyone starts in their mid 20s, or 30s, or 40s. And you just start as, as what you can do, whether it's 100 bucks a month, 50 bucks a month, 10 bucks a week, whatever it is, you start small, because that stuff adds up really, really quickly, you start with $100 per month. And for that first year, you have 1200 saved, okay, it doesn't sound like a large number, but you do that for the next 10 years. And that continues add up pretty quick. And then along that time, maybe you get a raise at work, maybe you change something in your life, you're not spending as much, and you're able to save 200 per month. Now that's another 2400 Going in per year. But you'd never get to that point, and you never have the base to jump off of. If you didn't save that $100 per month, or that $50 per month, whatever number that is. So you don't need a lot of money to invest, you can start really small, just start with a baby step forward. If you're nervous, if you're scared, starting with 1020 bucks a month, get the idea of what this is going to look like for you long term. It's something you're gonna think yourself and 1520 years when you have a better idea of what you're doing. But you took the steps when you didn't, when you were still scared of starting. Those first steps are so monumental and changing what your future looks like 2030 years from now. And it's so hard to look that far away and think, Okay, this, the $100 I saved this month, is going to change my life in 30 years. And it's hard to think that way. But when you start and you just do that consistently head down, don't even think about It's like another bill$100 a month, $100 a month, $100 a month and 2030 years, it truly will change your life. And in 2030 years, you're going to be happy and thankful that you started investing when you quote unquote, didn't have a lot, because then you will, and you'll have more. And it will just compound into more and more. But you need to start when you don't think you have a lot. And that's the only way you get there. So that's the second myth, you need to start. Even if you don't have a lot do it, you can it will build up and it's going to feel good. You building towards something investing towards something saving towards something, it doesn't feel great right away, because you still have that change in your mind that okay, this is for the better of me long term. And it's hard to think that way. But the second you do, it's going to feel good when you put that 100 bucks a month away. Or when you start at 20 and you get to 100 bucks per month, you made me I started at 20 A year ago now I'm at 100, I'm killing it. And that's true, you definitely are, you just have to start today with whatever you can. And then the third myth, let's get into this and wrap it all up the myth that quote, I can lose all my money. Now, in investing, there are certain strategies you can take, that will lead to you losing all your money. There are not any strategies anybody would recommend. They're not strategies you should do, depending on your current financial situation. But if you just take your normal s&p 500 investment, or a well rounded portfolio of stocks, bonds, and cash, there's always going to be a bucket that's doing well there might be a bucket that's not you're gonna have a balance, and there's gonna be years where you do better than other years. But for instance, the s&p 500 hasn't has returned eight to 10% per year. And it's history. Now there's years where the s&p 500 is down 20. There's years where it's up 20, there's the balance. And at any one time, yes, you might be down, you might be up. But if you stay consistent, and you have smart investments that you know, you believe in long term, I'm not talking these one off shots on this penny stock company that no one's ever heard of, and you're gonna put $1,000 in it, because it might turn into 100,000. Yeah, that might go to zero, you might never see that again, because that company is way too risky. But if you invest in a risk global that's comfortable for you, and you invest in a long term horizon, and you believe in the companies that you're investing in. And they're good, solid companies that all the research out there and all the data shows you that yes, this company is good and solid and long term you should be okay. It's one of those things where you won't lose all your money, or you'll be very much less likely to do so. So don't take the super risky penny stock bet of an investment. If you just stay consistent, invest in companies, you know, invest in companies that people believe in that the market uses that the economy push that push the economy forward. It's one of those things that yes, over time, it will fluctuate. But long term, if you invest in a long enough horizon, you will will be in a better spot because of it. And you just have to think that way. You can't look day to day you look day to day in the market and you'll go crazy. You live day to day the news and you'll go crazy. Everything's negative. There's not many headlines that are positive. And then when the market reacts to that you kind of panic. And you don't need to do that. Just invest on longterm enough horizon, invest in companies that you and the market and economy believe in the s&p 500, Apple, Amazon, Microsoft, Google. And it's one of those things that if you continuously do so, and then at a certain point, you transition that portfolio into a blend of stocks, bonds, and cash, and it's all working together and you have a plan, you'll be on the better side of things, and you won't lose all your money, because that's a complete myth. So, just wanted to get on here, have those three quick myths that I hear a lot in the day to day? And they're just things that if you change certain aspects of how you think about it, you'll be in a much better spot because of it. And yeah, that's pretty much what it comes down to just changing your mindset around a couple of these things. You'll be a better spot in the long term, so stay happy, stay healthy. I will catch you guys on the next one. I'll see you. Securities offered through securities America Inc. Member FINRA slash SIPC. advisory services offered through securities America advisors Inc. Wealth Management Services and securities America are separate entities. The opinions and forecasts expressed are those of the author and may not actually come to pass. This information is subject to change anytime based on market and other conditions and should not be construed as a recommendation of any specific security or investment plan. Past performance does not guarantee future results.