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There’s Always A Reason Not To Invest

There's Always A Reason Not To Invest

Originally aired 9/1/2021

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THE SKY IS FALLING!! 😱 At least that can be what it feels like as an investor, sometimes. But in this episode of the Get Ready For The Future Show, we’re exploring whether the reasons *not* to invest are all they’re cracked up to be.
 
You’ll learn:
  • 3 big reasons people say they don’t want to invest
  • One trend that’s progressively troubling younger investors
  • Valuable market insight from LPL Chief Market Strategist Ryan Detrick

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SHOW NOTES

Extra, Extra! Read All About It!

  • About 61 percent of adults say they find investing in the stock market “scary or intimidating” (SOURCE: Ally Invest)
    • And this trend is getting worse with younger generations. Millennials feel significantly more intimidated than Baby Boomers or Generation X.
  • Reason #1: Have you seen the headlines?
    • Whether the headline comes from a newspaper or a push notification, there will always be negative news that will make investors wary.
    • In fact, a study by Quora found that nearly 90% of all media news is negative.
      • Furthermore:
        • Sensationalist stories form 95% of media headlines nowadays (SOURCE: The Guardian).
        • Media reports with negative news or statistics catch 30% more attention (SOURCE: Kinder).
        • 7% of people exposed to negative news go on to develop anxiety issues (SOURCE: NCBI).
      • Let’s take a look at the standout news of the past 50 years.
        • Since we’re in 2021, we’ve highlighted events from each year ending in one, along with ever-tumultuous 2020.
        • Disciplined investors who tuned out the noise and stayed invested in stocks were rewarded in the long term.
      • We don’t know what the rest of 2021 will bring.
        • Even if it’s a down year for stocks like 1981 or 2001, history suggests the market is likely to be resilient and reward investors over time.
      • Education is the antidote to fear.
        • Headlines speak to the While it’s important to understand what’s going on, it’s more important that you understand how it impacts your economy.

INTERVIEW: Ryan Detrick

  • Joining us today as he does every month to help us get some perspective on what’s going on in the market is LPL Chief Market Strategist Ryan Detrick!
    • Ryan, how are you?
    • What are your thoughts from the outcome of the Fed’s economic symposium in Jackson Hole, Wyoming last week?
    • There continues to be a lot of concern over the recent spike in inflation with the Fed saying they believe it is transitory.  Are you seeing any data that might indicate that the Fed might be wrong, meaning inflation will be a longer-term problem?
    • Stocks seem to have gotten into a trading range in the last month with more volatility showing up in the last 60 days or so.  However, the outlook continues to indicate growth prospects are still strong.  With that in mind, what’s up with the equity markets and why aren’t they reacting more favorably?
    • The Delta Variant seems to be raging in many parts of the country, including Arkansas with ICU beds for COVID patients running at capacity last week. What are the chances that this new strain of the virus will put a dent in an otherwise strong economy?
    • Last week, the U.S. House made significant moves to pass both a 3.5 trillion-dollar budget framework and a 1 trillion dollar infrastructure plan.  A lot of people are hyper concerned about the continued spending of money that we don’t have.  What does the prospects of these two major spending bills hold for the future of the markets and the economy?
    • An area that we don’t talk much about is the market for municipal bonds (that is: debt issued by state and local governments.) The prospects of potentially higher taxes on the federal level seems to have investors pushing up the prices of muni bonds.  What are your thoughts on the fundamentals of investing in these tax-free instruments and are we seeing a bubble forming in municipal debt?
    • Earlier this year, bond yields peaked with the 10-year treasury hitting a peak of 1.7% which it hadn’t seen since before the pandemic.  Now, yields are back down on the 10 year to under 1.3%.  That would seem to signal concern about the economy within the bond market.  What are your thoughts?

Just Give Me a Reason, Just a Little Bit’s Enough

  • Reason #2: The market is too scary right now
    • “Have you seen the stock market recently? It just keeps dropping! I’m going to wait until things settle down.”
    • Waiting on the market to settle down is a lost cause.
      • Stock market swings are not only normal, but they’re expected. The stock market will move up and down, sometimes rather rapidly. That’s just part of the deal.
    • If you’re trying to beat the market by picking stocks or predicting the market’s ups and downs, then investing is a lot like gambling.
      • You might get lucky, but more often than not you’ll probably walk away a little poorer than you were before.
    • However, if you make a plan based on time-tested principles, then it’s more like being the casino.
      • You’re technically still gambling, but this time the odds are in your favor. Will you win every time? Nope. Sometimes you’ll have to suffer some pretty big losses. But if you stick to your plan, the odds are high that you’ll win over the long term.
    • Reason #3: The market is too good right now
      • “I just saw on the news that the stock market reached record highs. That means it has nowhere to go but down, right? What if I invest now and it immediately tanks? I don’t want to lose all my money.”
      • This is the opposite fear as the previous one, and it can be just as scary. But there are two big reasons why market highs shouldn’t stop you from getting started:
        • First, we have no idea what the market is about to do.
          • The latest market high might mean we’re headed for a drop, but it might also mean we’re simply on our way to even bigger highs.
          • Being unsure about what’s going to happen next simply can’t be a reason not to get started, since there’s never going to be a way to be sure.
        • Second, if you’re worried about investing everything and immediately losing at all, well, you simply don’t have to invest everything all at once.
          • You have two big options for taking a more cautious approach:
            • Dollar cost average – Rather than putting all of the money you want to invest in all at once, do it over time with small, regular contributions.
              • Cow Story
            • Go 50/50 – Investing doesn’t have to mean putting 100% of your money into the stock market. You could put some into the stock market, and some into a more conservative investment like bonds. That way if something bad did happen in the stock market, you would have some of your money that wasn’t affected.

Forget You (Oo oo oo)

  • We understand that investing can be scary, but it doesn’t have to be.
    • Know that there’s as much if not more risk in staying where you are.
      • Inflation is on the rise.
    • You may think, “well, I don’t know enough.”
      • That’s why we’re here.
      • Part of our job is to take the complex concept of finance, make it easy for you to understand, and put it to work in your daily life.
        • We require our advisors to have “the heart of a teacher,” which means they take an educational approach to your plan and helping you implement it.
      • You shouldn’t need a glossary to decode a conversation with your advisor, and you certainly won’t need one to talk to us.
        • Financial jargon won’t tell you if the plans for your future are what’s best for you personally.
      • You may think, “well, I’m too young” or “I’ve got time.”
        • Time is one of the most powerful investing resources – one that you can’t get back.
        • The best time to start is now.
      • You may think, “I don’t have enough money.”
        • At GenWealth, we have no investment minimums, ever.
          • We value all levels of wealth.
        • One of the biggest disservices our industry has done is to take financial planning—a powerful tool for cultivating individual wealth and security—and make it inaccessible to the people who need it most.
        • We see financial service as a public service, and anyone who wants the support should be able to get it.
      • Ultimately, you’ve got to forget these “reasons” and just start.
        • Market volatility can work in your favor.
        • The media profits off of your fear – don’t let them cost you your financial future.
      • You’re unique. Your financial plan should be, too.
        • Your financial plan is not:
          • A checklist
          • A list of goals
          • A set of investments
          • A collection of stocks you picked out yourself
          • A financial product or collection of products
          • Something that sits on a shelf
          • A bunch of money you have socked away that you don’t touch
        • Your financial plan is a living, breathing, and evolving series of decisions customized for you and your family that takes what you’ve earned, accumulated, and saved—no matter what that is—and turns it into a system of income for you to continue to live on for years to come.
      • We’ve got three different types of planning at GenWealth depending on what stage of life you’re in:
        • Moneyworks for those just starting out
        • Moneyguide for those balancing life and money
        • And the Ready to Retire Process for those nearing or in retirement
          • Visit getreadyforthefuture.com to learn more and find the best fit for you!

FINAL THOUGHTS

  • Your future is worth the investment.
    • Whatever your reason for not investing, odds are that there’s a better reason to
  • Education is the antidote to fear.
    • Don’t let your emotions or a gut reaction to external circumstances dictate your future.
  • Want a weekly email update to help you become financially smarter in four minutes or less?
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    • No fear-mongering, ever. Just straight talk.
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