Moving the Financial Goalposts

Your favorite football team is playing in the Super Bowl. They’re down by two points at the 40-yard line with seconds left on the clock during the fourth quarter. The kicking team comes out to try for a field goal and attempt to win the game. Before the ball is snapped, an offensive lineman flinches, causing a five-yard penalty. Even though five yards is a small distance, it can have a major impact on the outcome of the game given the current situation.

The same could be said for anyone who is planning for their retirement. Some people will make the decision to change their goals and deadlines, moving the goalposts with their own financial and retirement plan further away. Consider the following when creating your financial and retirement goals and put yourself in the best possible position to kick that game-winning field goal.

Avoid Falling Into the “Cash” Trap

When you want to accumulate money in your savings account, you probably have a certain number in mind that you would like for your account to be at. When your account hits that number, it’s important to use some of that for investments and not get infatuated with just simply keeping the money as cash.

Cash that is used for investments can grow long-term compound and potentially provide you with a better lifestyle. That doesn’t mean that you need to put your cash in high flying stocks, but you do want to have a situation where you have some liquidity with those additional assets.

When you go to the bank, you’re lucky to make 0.1% on your savings account and inflation is eating at every dollar. That is a very big problem when it comes to compounding money over time that you should be aware of.

Don’t Postpone Your Chance to Invest

Whatever the case may be, there’s always going to be something in life that may preclude you from investing. If you budget your money accordingly and have anything leftover at the end of each month, you need to be investing that because it can compound over time.

Consider putting your money into your 401(k) or your workplace retirement plan if you’re getting matched. If you’re not putting in enough money with the match that is made available to you, you’re missing out on a return as much as 100%. We’re not talking about investing hundreds of thousands of dollars at a time. Start small and form those healthy financial habits.

Know Your Risk Tolerance

It’s important to have an open conversation with your financial advisor about your risk tolerance. Everyone’s definition of risk in terms of being aggressive or conservative is going to be a little different. Variables such as being a one-income household versus a two-income household can play an integral role in your risk tolerance comfort level.

If you think about where the stock market’s been for the last 10 years, it would be fair to say that everything’s been riding high. If you’re someone who typically likes to invest more conservatively, you may feel at times like you’re going to miss out. Sometimes the opposite happens and can bring into question whether you want to retire when the market is down. Though we haven’t seen that in a while, it doesn’t take much to get hit over the head once with a shovel to remember that feeling.

The last thing we want to have is another COVID economic event where the market crashes and you find that you’re too aggressively or too conservatively invested in and you can’t keep up with the cost-of-living adjustments due to inflation. So, it’s important to recognize where you stand and your comfort level in terms of your risk tolerance.

If you’re interested in having a conversation about your financial assets and retirement goals, consider talking with one of our financial planners at Financial Dynamics & Associates, Inc. As a firm focused on creating customized retirement plans in the Midlothian and Richmond, Virginia metro area, we may be able to help advise you based on your overall financial situation.

This information is not intended as a solicitation or an offer to buy or sell any security or investment product. Advisory services offered through J.W. Cole Advisors, Inc. (JWCA). Financial Dynamics & Associates, Inc. and JWCA are unaffiliated entities.