I am Kyle, a Financial Advisor at Newroads Financial Group. Growing up, jargon money terms that were thrown around made me as confused as a chameleon in a bag of Skittles. The day when it would all make sense to me felt out of reach. A required high school investments class, however, left me ravenous for more knowledge on these wide-ranging topics. Now, when guiding individuals through different life phases, I enjoy being a resource who simplifies complex financial topics and dispels myths about managing money.
The Asset Accumulation Phase:
This phase usually lasts until around age 45. The funds available for saving and investing may increase gradually as one moves through this life stage. For longer-term goals like retirement or saving for a child’s education, riskier, growth-focused investments might be appropriate, since there is generally plenty of time left on your “financial journey.” Starting early is critical because it gives your money more time to compound. Saving for your long-term goals is like rolling a snowball down a hill: the earlier you start, the bigger your snowball is at the bottom.
The Protection Phase:
This phase usually lasts from ages 45 to 60, or until retirement. One may become aware of the risks present to their hard-earned savings and become more conservative. However, one should also be aware of the risks of being too conservative, because their savings may not keep up with the continually rising costs of living.
The Gifting Phase:
This phase usually begins at age 60, or one’s retirement date, and lasts the rest of their lives. Here, gifts to heirs and expensive vacations to reward oneself for hard work may be prevalent. However, when withdrawing money in retirement, it is critical to be aware of risks present to your savings, such as sequence-of-returns risk, which is the risk that making withdrawals during poor market performance early in retirement may accelerate the depletion of retirement savings, like draining water from a leaking bucket. A potentially viable strategy to combat this risk may be to create a guaranteed income stream in retirement that will result in more confidence and less reliance on investment portfolios.
Follow Kyle on Instagram: @Kythemoneyguy