Long-term investing involves holding onto your investments for a substantial period, typically years or even decades. This strategy is based on the assumption that financial markets have an inherent upward trend over the long haul, despite short-term fluctuations. One of the key advantages of long-term investing is the potential for compounding. In this way, you’re not just earning returns on your initial investment, but also on the returns that investment has already generated.

Despite the potential benefits, navigating the financial markets can be complex, and that’s where a Certified Financial Planner (CFP) comes in. A CFP is a professional who is trained to help you make smart financial decisions. They can guide you through the process of choosing the right investment strategy based on your goals, risk tolerance, and time horizon.

A CFP can also help you keep your emotions in check. It’s not uncommon for investors to react impulsively to market changes, and this can lead to poor financial decisions. By providing expert advice and objective feedback, a CFP can help you stay focused on your long-term objectives, making it easier for you to stick to your investment plan.

Investing is not just about the numbers, it’s also about having a solid financial plan in place. By working with a CFP, you can create a comprehensive plan that takes into account your current financial situation and future goals. This includes factors such as retirement planning, risk management, tax planning, and estate planning. A CFP can help you understand the bigger picture and make sure your investments are aligned with your overall financial plan.

Furthermore, a CFP can also provide valuable insights and recommendations on various investment options available in the market. They have access to a wide range of investment products and can help you diversify your portfolio to minimize risk and maximize returns. With their expertise, you can make informed decisions about where to invest your money based on your unique financial situation.

Long-term investing can also offer tax benefits. Depending on the type of investment, you may be eligible for certain tax breaks that can help increase your overall returns. A CFP can help you understand and take advantage of these opportunities to optimize your investments.

In summary, long-term investing is a powerful tool for building wealth and securing your financial future. And with the guidance and expertise of a Certified Financial Planner, you can navigate the complex world of investments with confidence and make informed decisions that align with your objectives. So, don’t delay any further and start planning for your future today! Your financial stability and peace of mind are well worth the investment. Trust in the expertise of a CFP and watch as your investments grow over time. It’s never too late to start investing, but the earlier you start, the more advantageous it will be for your financial future. So, take action now and set yourself up for success with long-term investing and the help of a CFP. Your future self will thank you! Contact a New Century Investments today and begin your journey towards financial freedom.

About Matt

Matt Ward is a financial advisor and the president of New Century Investments, an independent investment advisory firm serving business owners, pre-retirees, and retirees in the Dallas-Fort Worth area and beyond. Matt is passionate about integrating investing, planning, and tax management into a holistic approach. Matt’s breadth of knowledge and experience in both taxes and investment management sets him apart, giving him the ability to design, advise on, and manage business strategies, tax efficiency, and retirement planning. He is known for his care and attention to detail and works hard to develop personal relationships with each of his clients so they can benefit from his customized service and guidance. He loves walking with his clients through their financial journey, supporting them and celebrating with them as they reach their goals. 

Matt’s Corner

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But how much should we actually save? Well, this depends on your lifestyle goal.

For instance, an individual who’s in their early 30s could save $12,000 per year (or $1,000 per month) and have $1.1 Million at retirement. Will $1.1 be enough in 30 years? Assuming inflation is 3% per year, then $1.1 Million will really only be worth $600,000 in today’s dollars.

So this begs the question, is $600,000 enough?

Well, assuming you earn a moderate rate of return and inflation is 3%, this would give you a lifestyle of approximately $30,000 per year in retirement. Now, that may work for some, but others may want a similar lifestyle to what they spend now, or maybe even more luxurious retirement.

Determining your savings strategy starts with your goal. Retirement, college planning, and saving for a new home are a few of the most common savings goals.

Call to schedule a time to discuss your savings plan with us. We will help create a realistic savings plan and be there to ensure that we make the necessary changes along the way. Say inflation increases to 5%, or college expenses increase, adjustments will need to be made to your savings plan.

It’s easy to put this stuff off. Start budgeting and saving early. Your self in retirement will be thanking you for doing this.

Call today to start your financial planning journey! 817-238-6300

Matt Ward, CFP^®

Schedule appointment

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I stumbled across an excerpt written by  a highly respected investment professional.  Take a look:

“There are many financial concepts we can apply metaphorically to our personal lives, like diversification (having varied interests), asset allocation (considering where we put our time and energy), and rebalancing (taking time to reflect and adjust).

But, while investing needs to be from the head — as logical, rational and unemotional as possible — our relationships with others and the world around us needs also to be from the heart — as sensate, vulnerable and empathic as possible. However, inevitably, in both cases, we will suffer loss.”

In life, we go through cycles of good, mediocre, and rough patches.  Why should investing be any different? The disciplined and patient investors find opportunities, even optimism, during the worst of times.

Over 15 year periods, history has shown us that U.S. stock markets are up 100% of the time.   In the short term, stocks are less predictable.  But, the growth of the global economy has been upward trending.   But, inevitably, there will be market corrections.  Some corrections may be small, some may be bigger.  There will even be full blown stock market crashes on occasion.  Review the following graph.  This shows why stock market investing is key to adding wealth (rather than leaving the money in a checking or savings account). Stock market investing is what outpaces inflation and adds real wealth over the long term.

The issue with leaving all of one’s money in a checking/savings account is that the individual loses their buying power due to inflation.  Treasury Bills and Government Bonds tend to keep up with inflation, but not much more than keep up.

Let’s talk about Compound Interest. If an investor’s goal is to save $5,000,000 (before taxes) by age 65, assuming a hypothetical 10% rate of return, the 25 year old (with a 40 year time horizon) has to put away $785 each month.  That equates to a total of $376,800 of their own money, which means $4,623,000 (or 92%) of their wealth comes from compound interest.  Let that sink in. Over 40 years (age 25 to 65), the investor puts in $376,800 and has a little more than $5,000,000. 

However, the 45 year old wishing to accumulate the same $5,000,000 by age 65 (this time only having a 20 year time horizon) will need to save $6,500 per month to reach their goal.  Again, this assumes a 10% return.  The 45 year old will save $1,560,000 of their own money (over 3x as much as the 25 year old), which means $3,440,000 (or 68%) of their wealth comes from compound interest.  Over 20 years (age 45 to 65), the investor puts in $1,560,000 and has a little under $5,000,000.  Still not too shabby, but the individual who invests for a 40 year time horizon is much better off.

So why does the 45 year old have to shell out over 8x more each month?  Because, the way compound interest works, the longer you remain invested, the more your army of dollar bills goes to work for you.

Look at the chart below.  This shows $1,000 invested, nothing more, and compounded at a 10% rate of return for 20 years.  The compound interest curve gets steeper the longer we remain the course.  The army of dollar bills at work grows stronger and more abundant over time.

Article by Matt Ward

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