Two Types of Soldiers
2min Video
It’s been said that there are two types of soldiers in the Army: those who can shoot at the range, and those who can shoot when being shot at. This quick video reviews a strategy that empowers you to be the latter.
Video Transcript:
It’s been said that there are two types of soldiers in the Army: those who can shoot at the range and those who can shoot when being shot at. Let’s talk about a strategy that ensures you’re the latter of the two
So today I want to talk about dollar-cost averaging. This strategy entails investing a consistent amount, at a consistent frequency, removing timing & emotions from the decision. One of my favorite financial bloggers created this awesome chart that shows the power of dollar-cost-averaging. In this example, we simply invest $100 a month into the S&P 500 starting in 2007, before the mortgage crisis, one of the biggest crashes of all time. Even those initial $100 contributions would still amount to over $300 today. If you stuck to your guns and kept buying throughout the crisis, some of those $100 investments would have eclipsed over $600 today.
As an advisor, the majority of the wealth that I see for most folks getting ready to retire and spend their nest egg is in two areas: their 401ks & the equity in their home. When you think about it, it makes sense. Those are two areas where savings are automated and consistent. Many of you are already taking advantage of this: every time you get paid at work, you have money withheld from your paycheck, and every time you make a mortgage payment you increase the equity in your home.
Many people I talked to last year confided to me that they were kicking themselves for not buying into the market with cash they may have had on the sidelines back in March of 2020 during the Pandemic. And they’ve waited for another pullback. Well, the reasons for market pullbacks are always different, but the feelings and emotions are the same….. So, if you are a long-term investor, I hope this quick video gives you some confidence in the long game. Howard Marks once said, “What a wise man does in the beginning, the fool does in the end.” I know that uncertainty amid danger makes us want to hide out in a bunker, just make sure you are continuing to shoot while being shot at right now.
As always stay the course & stay on point.
