Investing After A Great Year

It is still early in the year – there is still plenty of time to evaluate how to start or tweak a savings and investing plan. In fact, it is ALWAYS a good time (January, February, March, July, October, December…) to evaluate savings and investing. But after the amazing past year and decade in US and global stock and bond markets, it may cross your mind to say,

  • “Should I wait to invest?”
  • “How can markets keep going up, up, up?”
  • OR,
  • “I need to jump on the bandwagon here!”
  • “Growth stocks are the way to go! I have stock ideas!”

A solid idea is to: pause, evaluate where you are personally and financially, look back at a handful of data points (see below), seek advice from an investment professional, and then execute an informed plan. Here are a few thoughts and a chart.

Thoughts – these are part of a real response I gave to a successful friend of mine seeking a bit of guidance on investing for “fun” in addition to the boring part of his portfolio:

  • “First and foremost, SPENDING (and its counterpart, saving) drives investing (big or small) as boring as this sounds!
  • Meaning that before starting any NEW savings/investing vehicle, first identify that your spending and overall savings are at comfortable or manageable levels. (This may already be the case for you? This consideration is paramount.)
  • Observe what major financial commitments you have in your short- and intermediate-term future. Multiple college tuitions? New roof for the house? Reunion with friends in the Bahamas?
  • Are these events mostly already funded? 
  • What is your philosophy on funding, for example, college tuition? Pay for your kids’ tuition? Or suggest they have “skin in the game”? Philosophy on spending for travel? At least one “nice” trip per year – no matter what?
  • How close are you to the complete funding of these goals?
  • Thinking through these points FIRST can lead you to the critical decision: how to save, how much to save and how often to save (for example monthly or chunks periodically).

Next, check out the following chart. Two parts – top and bottom.

KWD Chart

Not only was the year of 2019 a great one in the markets but check out the past 20 years! Despite several major hiccups and a “lost decade” – this chart shows that positive returns are unpredictable and there is never a perfect time to start saving and investing. Gradual saving over longer-term periods is the way to build wealth and peace of mind – whether you want it to be “fun” or if it turns out to be “boring but profitable”. Even “boring” can turn out to be exciting in the long run.

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