Jan 15, 2021
You’ve heard the old expression about putting your money to work for you, but what job are you going to give it? There are many different ways to invest and save your money but you have to know what results you’re trying to achieve.
When you think about your finances, ask yourself what does money represent and what do you want to get out of your money? There are many things you may look to accomplish, but the three primary things you hope to obtain are growth, safety, and liquidity.
The question we get a lot is what investment can achieve all three of these? Unfortunately, that’s the silver bullet of investing. You’re just not going to find it. So the key is building a portfolio that’s diversified by trying to accomplish two of the three qualities. Once you figure out the ‘job description’ of a specific account, you can determine what you want to do with the money.
Let’s look at investments that will help you get safety and liquidity. The first and most common is cash. Many people like to move more and more into cash as they get into retirement. Another option is savings bonds, which used to be used much more in prior decades. Something to think about with liquidity is it comes in different forms. You might need the money next week, in six months, or in a year. Different timeframes allows for different investment options.
If you’re looking for liquidity but you want to get growth out of your investments, the place most people turn is the market. We’d be dealing with individual stocks, bonds, ETFs, and mutual funds. This gives you the possibility of growth but also the option to access your money at any time.
Now let’s think about getting growth but also keeping the safety quality. Real estate is an investment that many people choose because it typically holds its value and appreciates over time. Annuities might also be in that category but it depends on the type of annuity. That’s something your advisor can assist you with.
The most important thing you can do is determine which objectives you have for each account you have and that’s where having a plan comes into play. We can look through your portfolio and see how balanced you are and whether you’re meeting those objectives. As you move forward, think about these qualities when evaluating an investment and it should make your decisions a little easier.
Use the timestamps below to hear a specific segment.
0:32 – What does qualities of money mean?
1:19 – The best investment to achieve all three
2:23 – Diversification is key
4:04 – How to get safety and liquidity.
6:30 – Different types of liquidity
7:58 – Liquidity and growth.
9:11 – Growth and safety
11:14 – Biggest thing for you to think about
13:08 – Here’s what we recommend
Thanks for listening! For additional financial resources, visit us online here: https://www.flemingfinancialservices.com/