Investing advice that will help any investor beat their goals
I’m revealing three investing tips that will put your investments on track and rocket your returns.
These three tips don’t involve picking stocks or trying to time the market, they’re outside the ordinary and are going to help you beat your goals. In fact, I’ve used these ideas in a course I sell for $350 but I’m giving them to you free in this video.
Join us for a free webinar detailing this Goals-Based Investing Strategy for a personalized plan that meets your needs with less risk.
Simple Investing Tips that Beat the Market
I’m excited about today’s video because I’m pulling out the three best investing ideas from my goals-based investing course to share with you right now. These are three core concepts that will change how you think about investing and help you beat your goals.
I’m going to show you how your investments change as you age, exactly how to stay on track to meet your goals. I’ll be revealing an investing strategy that saves thousands in fees and a special retirement investing system that gives you both income and growth.
I’m going to detail all of those in this video, all three of those investing tips. Then, in a special free webinar I’m offering to subscribers of the channel, I’m going to show you a goals-based investing strategy that incorporates all three plus creates a personalized portfolio for your needs.
The webinar is completely free so reserve your spot here. In it, I’ll guide you through every step of my goals-based investing course, a 12-lesson course on customizing your investing strategy to meet your needs.
The webinar is free and will give you everything you need to get started. I don’t believe in holding anything back to sell people into my course. It’s just there for those that want a more hands-on and detailed approach.
Investing Tip #1: How Investments Change as You Age
But let’s get to those three key investing ideas because I’m excited to get started and I know they are going to help you be a better investor.
First here is the idea that your investments should change as you age. This is hugely important but something most investors don’t understand. They’re so focused on that returns-based investing strategy, chasing stocks and reaching for as high a return as possible, that they don’t realize their investments are completely wrong for their needs.
Think about a timeline of your financial life. In your 20s and 30s, you’ve got decades of saving ahead of you before retirement and even before other large financial goals like college costs. Your focus here is exclusively on growth and that’s going to guide your investment decisions.
As you get older, into your late 30s then you still need that growth because you need your money to work for you to reach those goals but you also start needing that diversification that’s going to save your butt when things go south.
Later in your 40s, you still need the growth but your focus has started to shift to safety to protect the money you’re going to need. Over the next few decades, your focus shifts entirely to safety and income as you start using the money.
Now what happens here is that investors forget about these shifting needs. You don’t just wake up one morning and say, “Well that’s it, I feel older. Better adjust my investments.”
No, you keep picking stocks and reaching for those returns. You know you should have some money in other assets like bonds and real estate. You’re not quite sure how much in each but it doesn’t matter because you want to take advantage of one more year of stock returns.
One day, you wake up, you’re in your late 50s. Maybe you have a decent stock portfolio and everything is roses.
Except then market falls apart. You’ve got everything in stocks. You start losing sleep as you see your nest egg crack. You finally panic and sell out of your investments to save what’s left. You’re not sure what you’re going to do for retirement.
This isn’t just some narrative to scare you. This is what happened to millions of Americans in 2000 and in 2008.
They didn’t understand how their investments should change as they aged and they paid the price.
So let’s look at each decade of your life, some ideas on how to invest and how much to have in stocks, bonds and real estate. We’ll cover investing in your 20s through 50s and then a special retirement strategy for your 60s and beyond.
Investing in your 20s, you’re going to have most of your portfolio in stocks for that solid growth. Understand that these percentages are just a rough idea and will depend on your specific goals and needs. Here we have about 60% of our money in stocks with 15% in bonds and 10% in real estate. You can get both of the bonds and real estate exposure through funds.
The other assets here are going to be high-return investments like startup investing, peer-to-peer or other alternative assets but it’s going to be up to you. If you want to put this amount in real estate and stocks instead, that will still give you the growth you need.
At this point in your life, you may or may not need some in cash besides an emergency fund but I like keeping a little just in case stocks crash to give you a little flexibility to buy in.
Investing in your 30s, your portfolio probably isn’t going to look much different but you’ll start gradually shifting from stocks into other assets. Here you’ll still have most of your money in stocks but maybe a little more in real estate than in the prior decade. You don’t have to do this every year, you can probably wait to shift your assets every five years, just don’t neglect it altogether.
Making these gradual changes from your 20s to 30s is important because it sets the habit of adjusting your investments. Avoid doing it here and what’s to keep you from shifting your portfolio in your 40s, or your 50s? Get used to keeping your portfolio aligned with your needs and you won’t have to worry about that stock market crash that wipes you out.
Investing in your 40s, you might need to start investing for multiple goals. Money for short-term goals like education costs will need to be invested more conservatively, with more money in bonds. Money for your longer-term retirement goals can stay in stocks and real estate for that growth.
Finally here, the decade before retirement, you’ve pulled back to maybe just half in stocks and a larger percentage in bonds and real estate. You might still have some in alternative assets but your definitely shifting to safety and protection.
I say a decade before retirement here because, while we’ve shown these in decades of age, that’s not necessarily when everyone retires. If you want to retire in your 50s then you’d start thinking about safety and protection earlier, maybe in your 40s. On the other hand, if you’re working through to your 70s then maybe you can invest a little longer for growth.
Investing Tip #2: Saving on Fees and Commissions
Our next investing tip here is how to save on fees and investing commissions.
Most investors don’t realize it but those fees, even on the least expensive investing sites, are one of the biggest reasons investors miss their goals. In fact, fees and other expenses can cost you hundreds of thousands over just a few decades.
Let’s look at an example. Here we have an investor with a $5,000 portfolio and $5,000 deposited annually, growing at 9% a year. Without any fees, that grows to over $681,000 over 30 years which is almost four times what the average investor has in their 60s.
Data from Fidelity shows the average investor makes 88 trades a year. That’s 88 times the cost to buy or sell a stock, usually between $5 and $10 even on the cheapest investing sites. Just that cost is going to mean losing over $119,000 over the period. One-hundred and twenty grand because of buying and selling so frequently.
Top it off though with investing in mutual funds where 1% of your money is taken every year as a management fee and you’re down another hundred thousand dollars.
You’re down more than $222,000 because of trading and fund fees here, and that math works out no matter how much you invest. Fees are an investment killer.
The problem for a lot of investors is they deposit money monthly into their investing account and immediately buy stocks with that money. Even if you invest in a simple portfolio of five funds, that means 60-trades a year.
I still want you to deposit money monthly. This is going to keep you in the habit of saving and investing. Instead of buying all your funds or stocks each month though, wait three or six months to invest your money. If you wait six months to buy those five funds, you’ve cut your trading costs in half and will save tens of thousands.
Similarly, you could also just wait every two months to invest and then invest it all into one fund from your list. This means you’re still only investing in each stock or fund in your portfolio maybe once or twice a year.
You’re not going to miss out on any huge gains by waiting to invest your money every few months. Having that thousand dollars uninvested for a few months is nothing compared to the decades it will be invested and stock prices are just as likely to go down as they are up in any given few months.
You also want to watch the expense fees on any funds in which you invest. I hate mutual funds for exactly this reason, because they cost so much each year. Instead, look for low-cost ETFs from Vanguard or other providers.
Investing Tip #3: My Favorite Retirement Investing Strategy
This next investing tip is not only going to protect your money in retirement but it’s also going to make sure you have enough income for expenses. This is a special system of investing during retirement called the Bucket System.
The bucket system calls for separating your investments into three groups. The first group is invested in cash investments like very short-term bonds and money-markets used to pay your living expenses. You’re not getting much of a return for these but they’re super safe and the money is guaranteed to be there when you need it.
Your second group of investments, that second bucket, is going to be longer-term bonds maybe with maturities of three to five years and some other income investments. You still want to keep these in safe investments so we’re not talking about dividend stocks but bond funds and maybe a high-yield market fund.
The idea is that the cash and returns from the second bucket will be used to refill your cash bucket. So at the end of each year, after spending down much of your first bucket, you take money out of the second one, that income bucket to refill for next year’s expenses.
The third and final group of investments is for growth, so these are going to be stocks and real estate and maybe some high-yield bonds. The idea is that the returns from this bucket will grow your portfolio to beat inflation and help refill the second bucket.
Since you have the first two buckets invested in super-safe money market and in bonds, you can afford to take a little more risk in the third-bucket investments. If the stock market falls, then you’ve got enough in those first two buckets to live on for a few years while you wait for stock prices to rebound and your third bucket to recover.
Now that doesn’t mean you invest in penny stocks or anything that risky in that third bucket but a portfolio of stocks and real estate funds will give you that growth you need.
When the market is doing well, you can take some out of the third bucket to refill your income bucket, the second group of investments. This just keeps going every year, using money from one bucket to refill the next one.
The way you put this together is start with 18- to 24 months’ of living expenses you invest in these cash bucket investments like money market funds and short-term treasuries.
You then invest three to five years’ worth of expenses in that second bucket, the income bucket of bonds. Then anything left is invested in the remaining bucket of stocks for growth.
Each year or six months, you refill your living expenses account with money from the income account. During years when the stock market is rising, you refill that second bucket with money from the growth account.
That way, you’ve always got enough in the second bucket to just use it for a few years to refill the income bucket while you wait for a stock market recovery.
This bucket strategy for retirement investing helps to provide safe cash for living expenses as well as growth from stocks. You still get the growth you need to keep your money working for you but also the confidence that you’ll have enough to pay living expenses. These are the three biggest investing ideas in that goals-based investing strategy I use but there’s still a lot left that’s going to help you reach your goals.
Don’t forget to click through and sign up for that free webinar where I’ll detail the entire goals-based investing strategy, how to get started and how to manage your own investments. In about half an hour, I can show you how to be successful investing and how to manage your portfolio on just a few hours a year.