Advice about what to do with money has been around as long as money has existed. While some basic concepts have stood the test of time, most strategies that work adapt to the changing conditions in the market, economy, the world, and your circumstances. The reality is that investment strategies and savings plans that worked in the past have encountered challenging new circumstances that have turned them on their heads.
The Great Recession of the early 2000’s highlighted how old investment ideas were not only ineffective but incredibly destructive to the retirement plans of millions of Americans. Perhaps the most important lessons investors learned from the Great Recession is that not understanding where your money is invested (and the potential risks of those investments) can work against you and your retirement plans. Essentially, managing your money and your investments is an ongoing process that requires customization and adaptation to an always changing world. People approaching or in retirement today need new ideas and professional guidance.
Hope So vs. Know So Money
There are essentially two kinds of money: Hope So and Know So. Everyone can divide his or her money into these two categories. The goal isn’t to eliminate one kind of money but to balance them as you approach retirement.
Hope So Money is money that is at risk. It fluctuates with the market. It has no guarantee. It is subject to investor activity, stock prices, market trends, buying trends, etc. This money is exposed to more risk but also has the potential for more reward. Because the market is subject to change, you really can’t be sure what the value of your investments will be in the future. You can’t rely on it at all, which is why we call it Hope So Money. It is important to have some, especially in the earlier stages of life when you can trade volatility for potential returns and you can allow time to smooth out the ups and downs of money exposed to the market.
Know So Money is made up of dependable low-risk or no-risk money, and investments that you can count on. Social Security is one of the most common forms of Know So Money. Know So Money is not as exciting as Hope So Money, but it is safer. You can be fairly sure you will have it in the future.
Knowing the difference between Hope So and Know So Money is an important step towards a successful retirement plan. Ideally, the rates of return on Hope So and Know So Money would have an overlapping area that provided an acceptable rate of risk for both types of money.
In the early 1990s, you could invest in either Hope So or Know So options and be successful. Today, you don’t have those options. Market volatility is at all-time highs while interest rates are at all-time lows. Yesterdays investment rules no longer work. Because of this uncertain financial landscape, wise investment strategies are more important now than ever.
Where are your retirement dollars positioned—Hope So or Know So?
Call today 417-886-5724 to schedule a complimentary appointment with our advisors Joe LaTour and Jim Margraf to get a second opinion on your current strategies.
Retirement is too important for guesswork.