Pearl Financial

When it comes to saving money for long-term future goals and expenses, I will always recommend investing in the stock market.

That being said, is there ever a good time to explore other investment strategies?

Absolutely!

High-yield savings accounts and CDs (Certificates of Deposit) have been making waves in 2023 and have been the topic of conversation across various news outlets. And it's for good reason.

Consider the following factors:

1️⃣ The stock market has been volatile.

2️⃣ Inflation is driving up the cost of goods.

3️⃣ High-yield savings accounts have a historical track record of stability, contrasting with the unpredictable nature of the markets.

Moreover, high-yield savings accounts are currently offering a rate of return of over 4% on your savings. This level of returns hasn't been witnessed in almost two decades!

So, with all this in mind, what should you do?

▪️ Should you place your money in the stock market?

▪️ Should you opt for a high-yield savings account?

▪️ Should you stash your money under the mattress for that extra firmness?

Here's my take:

While 4% is certainly better than 0%, it falls short of the exponential growth required to truly accumulate substantial wealth.

High-yield savings accounts should be utilized for their intended purposes, such as:

🚨 Building an emergency fund

🏥 Covering unexpected medical bills

🚙 Addressing car or home repairs

🐕 Managing emergency pet care expenses

💸 Avoiding debt accumulation

🏠💍👶Funding major purchases within a year

Once you've established your emergency fund, any additional savings should be invested in the stock market. It remains the most cost-effective and efficient method of securing your wealth, safeguarding your family's future, and ensuring a comfortable retirement.

In summary, use a high-yield savings account and CD's for short-term goals and emergency funds. Consider investing in the stock market for long-term goals, such as retirement, when you have a longer time horizon, and for higher returns in investments.

It's important to note that all these investment strategies, including high-yield savings accounts, CDs, and stock market investments, are available at Pearl Financial.

Feel free to reach out to us for further discussions and detailed information on these options. We'll be happy to assist you.

Imagine you have a piggy bank at home 🏦🐷🤑

A mutual fund is like giving your piggy bank to a trustworthy friend who loves saving money.

Your friend takes your piggy bank and combines it with piggy banks from other friends. Then, they use all the money to buy different things like stocks, bonds, and other investments.

You become a part-owner of this big piggy bank club, and the value of your investment depends on how well those things perform.

When you want to take your money out, your friend sells a portion of the piggy bank and gives you your share of the money.

Now, an ETF is a bit different. Instead of giving your piggy bank to a friend, it's like going to a special store that sells baskets of different things.

Each basket represents a specific group of investments, like stocks in a particular industry or companies in a certain index.

You can buy a basket that matches your interests. The price of the basket is determined by the value of the investments inside it.

If you decide you want to sell, you can go back to the store and sell your basket to someone else.

So, the main difference is that mutual funds pool together money from many investors and are managed by a professional, while ETFs are like baskets of investments that you can buy or sell on the market like a stock.

Another difference is that mutual funds are priced once a day, while ETFs can be bought or sold throughout the trading day.

Both mutual funds and ETFs offer opportunities to invest in a diversified portfolio of assets, but they have different structures and trading characteristics.

It's important to understand your goals and preferences to decide which one suits you best.

"Unsure about where to invest? Let's explore your options!"

Imagine you could go back in time and invest $100 into Stocks, Bonds, Real Estate, and Gold nearly one century ago.

Fast forward to today, and the results are staggering 😱

While any of these asset classes would've been a better investment than just leaving your money sitting in cash, stocks have clearly outperformed the other asset classes.

But hold on, there's more to consider.

While stocks have shown the highest returns, they come with volatility. Just look at the dips in 2000, 2008, 2020, and 2022. As you approach the time when you'll need to tap into your investments, it becomes crucial to reduce your exposure to stocks.

That's where more stable assets, like bonds, come into play. They may not have performed as well as stocks, but they offer stability, which is particularly valuable as you get older and need a reliable cushion for your investments.

Remember, the key takeaway here is that investing is important. But where and how you invest depends on your goals, risk tolerance, and time horizon.

Key take away here. Investing is important.

I talk a lot about the S&P 500 when setting up portfolios with clients.

But what even is the S&P 500, and how does it work?

The S&P 500 is made up of the top 500 US companies. That's right, five hundred, count 'em! And while it offers plenty of diversification, not all companies within the S&P 500 are valued equally.

In fact, when you take a closer look at the chart, it's pretty obvious that the tech giants like Apple, Microsoft, Amazon, and Google are the big cheese, comprising a whopping 20% of the index's total value 😱

Another topic to bring up is that not all the names inside the S&P 500 are as recognizable as Tesla or Facebook. Ever heard of Fastenal? Ameren? Prologis? They're 3 pieces of this 500 sliced pie 🍰

Another fun fact about the S&P 500 is that it's constantly changing and evolving. The index we know today is way different from what it was 20 years ago. As companies grow and shrink, the S&P 500 adjusts to track the top 500 US companies. So without lifting a finger, investors are riding the wave of the most prominent companies in the US market. Talk about a free ride!

To sum it up, the S&P 500 is a vital index that provides insight into the largest publicly traded companies in the US and their market capitalization. And even though it's just a fraction of all publicly traded companies, it represents a significant portion of their total value and almost half of the value of all publicly traded companies worldwide.

But don't go putting all your eggs in this one basket. Diversification is key, my friends! Investors should gain exposure to international markets and bonds to create a well-rounded portfolio. Remember, knowledge, diversification, and time are the greatest keys to building wealth.

Feeling anxious about your investments?

Take a breath.

Inhale for 3-4 seconds

Pause

Exhale for 3-4 seconds

Pause

Don’t panic sell if you're holding quality mutual funds that meet your long term financial plans and goals

Repeat

Feeling more relaxed? I know I am!

There are far too many investors that watch their stocks and do nothing but worry about whether or not they should sell.

Whether it be:

- Something you heard on the news
- A tip or warning from a friend / co-worker
- An article you read online
- Bored at work and have the free time to look at your account app

None of these examples are rational.

It’s a quick way to gamble with your hard earned money.

The best way to invest is to:

1) Make a budget and determine how much you have left over to invest

2) Invest what's left over in high quality low fee mutual funds with long term track records

3) Hold for decades

When you're ready to retire, take out what you need and keep the rest invested.

Then when you retire, we can meet for coffee and you can thank me

The longer you wait, the better off you will be.

A statement I live my life by and in turn invest by.

A question I've been hearing a lot this year is, "Stuart, the market is down, where should I be investing my money?"

The most important way to answer this question is to figure out how long will you be investing for?

The S&P 500 (which makes up the top 500 US based companies) has history which dates back to the late 1860s.

With over 150 years of performance data, below are 4 charts explaining your probability of success in the stock market

Picture 1 (Investing for 1 year): on any randomized year you have a 73% chance of making money in the stock market

Picture 2 (Investing for 3 years): you're a probability of making money on any random three-year period is now 83%

Picture 3 (Investing for 5 years): your probability of making money on any random five-year period is now 87%

Picture 4 (investing for 10 years): your probability of making money in any random ten-year period is now 94%

Fun fact. If you can hold off on touching your money for 11 years or more there's no data that shows you will lose any money.

Never gamble on the stock market. A 73% chance of success still has a 27% chance of losing money.

The odds are still great, but they become impossible to ignore if you're a long-term investor.

This is why long-term investors diversified over multiple sectors and industries are always heavily rewarded

The longer you wait the better off you'll be!

Mr. Kip is LOVING this fall foliage 🍂🍁 🍃

CNBC Squawk Box Bailout Fails Coverage 6am September 30, 2008

Confession time ☕️🐸

A lot of the content that I like to share and post are aimed to help others improve their financial health and well-being.

I firmly believe that spending less than what you make, living within your means and investing long-term in the stock market is the fastest and easiest way to become a millionaire and have overall financial security.

I have believed in these principles since I became a financial planner, which was over 40 years ago and I still believe it to this day

Although I think it's important to talk about how important investing and budgeting is, I have noticed that my recommendations could seem a tad over simplified

⁃ Cutting down on your expenses is difficult
⁃ Tracking your expenses is difficult
⁃ Listening to the news right now is scary
⁃ Looking at your investment portfolio right now is scary

Like most things in life, if you practice these principles intentionally and for many years they become easier.

- I track my income and my expenses monthly

- I make sure that each month I am spending less than what I make

- I invest in high-quality highly diversified mutual funds and ETFs

- I intentionally minimize my time watching the news because as most of you know, I am human, and feel emotions like fear and panic. I like to minimize those emotions if possible

Again, I’ve been doing this for 40 years.

For me, these things have become really easy, but for someone new, this lifestyle is hard to adopt

This is why the video for this post is a YouTube archived recording from CNBC dated from September 30th 2008.

Two things to notice here:

1. Look how cheap the market was in value! Holy cow! If only I had invested more back then! 😂

2. Listen to how scary and fearful everyone is talking!

Going back and listening to the news like this felt different…

It’s not September 30th 2008 anymore. We know what happened in 2008, and we know that we pulled through the 2008 financial crisis

It was scary BUT IF YOU DIDN’T PANIC YOU WERE HEAVILY REWARDED!

Please please please remember to

⁃ Continue budgeting
⁃ Dollar cost average into the stock market
⁃ Turn off the news
⁃ Not panic

It’s not going to be easy, but you will be rewarded for doing so!

I’m here to discuss either on Facebook, on the phone, or in person if you need more guidance.

You got this!

https://youtu.be/mic42jhlHbk

CNBC Squawk Box Bailout Fails Coverage 6am September 30, 2008 This broadcast is from CNBC from September 30, 2008. Some promos, commercials, branding, or interstitial material may be included. This content falls under t...

If you’re at all concerned about the market and your investment portfolio… Please read this.

It's safe to say that 2022 has not been an easy year for the stock market.

This feeling of pain and panic can be even more exacerbated given how euphoric 2021 was.

For all the new investors out there, I want you to know that you might be feeling absolutely devastated right now given this current market pullback. I want to reassure you that this is a perfectly understandable emotion to be feeling…

BUT… And this is one BIG but

By no means is this the end of the world

Not even close!!!

In times like these I like to look at the bigger picture. I've been a financial advisor for over 40 years, have experienced 6 recessions and five bear markets.

In 2008, I remember looking at my own investment statement and seeing my account drop by over 50%! Half of all my accumulated hard earned wealth! Gone!

That was painful. But what did I do after feeling that initial reaction?

🚫 I didn’t panic sell

🚫 I didn’t turn on the news

✅ I zoomed out. And was HEAVILY rewarded for doing so 🙂

Take a look back at how the market has performed over the last 1, 3, 5, 10, 20, 40, 100 years

The results speak for themself

SO, what do you do when investing in a bear market?

You change nothing!

Keep buying high quality, low fee ETFs and mutual funds on a monthly basis regardless of what the economy is doing

If you can do this, you’ll be rewarded. It just takes time

Client Appreciation Post 🎉

Shout out to one of our clients Kathy Hoyt Realtor

The definition of work hard play hard!!!

She is focused on:

- Making sure her money is safe and secure

- Is growing her real estate business at an exponential rate

- Is running for State Senate in Connecticut’s 17th district

AND can still find the time to enjoy the beauty of hiking rustic Maine with friends and family.

We need more Kathy’s in this world!!!

What are the two most important factors to becoming wealthy?

⭐️ Time ⭐️ and ⭐️ Compound Interest ⭐️

This is why the earlier you begin investing and the longer you wait before selling the better off you will be

Investing into the S&P 500 for a new born could have a monumental impact on their retirement

If we were to take the average annual return of the S&P 500 over the last 65 years you would've averaged a rate of return of 10.14%

There is no magic stock, currency, lottery or insider information that will get you a net worth north of 6 million dollars.

The way to do it is with time and compound interest

Now let's break this down in more detail

The example below shows a baby 👶

At birth this babies parents intentionally invest $100 a month from age 0 to age 18

At age 18 they stop investing $100 a month but allow the nest egg that they built to continue growing from ages 19 to 65

With dividends reinvested and no distributions taken at age 65 this little guy or gal will have a net worth of $6,349,214

NOW THAT'S A NICE BIRTHDAY PRESENT

What are the two most important factors to becoming wealthy?
⭐️ Time ⭐️ and ⭐️ Compound Interest ⭐️
This is why the earlier you begin investing and the longer you wait before selling the better off you will be
Investing into the S&P 500 for a new born could have a monumental impact on their retirement
If we were to take the average annual return of the S&P 500 over the last 65 years you would've averaged a rate of return of 10.14%
There is no magic stock, currency, lottery or insider information that will get you a net worth north of 6 million dollars.
The way to do it is with time and compound interest
Now let's break this down in more detail
The example below shows a baby 👶
At birth this babies parents intentionally invest $100 a month from age 0 to age 18
At age 18 they stop investing $100 a month but allow the nest egg that they built to continue growing from ages 19 to 65
With dividends reinvested and no distributions taken at age 65 this little guy or gal will have a net worth of $6,349,214
NOW THAT'S A NICE BIRTHDAY PRESENT

Let me start out by saying, for all of my friends that are able to block out the noise and continue to dollar cost average into the market... thank you!

You are the good ones and over time will be heavily rewarded for not panicking when the news gets scary.

I would also like to let you know this post is not for you....

This post is for the market timers.

So you’d like to out perform the S&P 500?

This is a really hard task to do.

Chart analysis, PE ratios, quarterly earnings; all can show you some ideas of companies to buy but may not reflect the price per share

I think knowing this information is important, but when going against the grain you have to remember the bigger you drill yourself into a hole the more you’ll need to get back to break even

A 5% loss does not take much of a gain to get back to break even.

But just take a look at what is needed to get back to breakeven from an 80% loss! You would need a 400% rate of return to get back to breakeven 🥵

From here you might be thinking what crazy penny stock, gambling, corrupt publicly traded stock/currency could drop 80%?!

Here’s a few. Since their highs from 2021 these larger scale stocks in currencies are down from their peaks:

AMC: 67%
Bitcoin: 74%
Peloton: 92.8%

Don’t get me wrong I think we are all well aware that 2022 has not been the best year for the stock market. From the lows of June

The S&P 500 was down 23%

The Dow was down 18%

The NASDAQ was down 32%. 😱

Though these are painful drops, these three indexes are backed by historical track records of long-term growth and performance

You’re not going against the grain. You’re picking high-quality low cost baskets of stocks that in the long run have outperformed having your money in cash

In fact historically, the 30-year return of the S&P 500 has been roughly 10-12%

This is why we do NOT go against the grain

Stick to buying high-quality investments that are heavily diversified over different sectors and industries.

Never gamble.

It’s a very easy way to lose your hard earned wealth


📷 - Investywise