Tom Provides Advice for Those Who Start Saving Sooner
Transcript:
Katie Nealis: So I’m 25, almost 26, would you give the same advice or different advice to that question (How Aggressive Should My Portfolio Be?)?
Tom Vaughan: Yeah, you could make a much stronger argument for you to be aggressive, because you’re actually looking at, you know, even if you want to retire early, 20 years, but it could be more like 30 years, or longer before, you’re actually going to need this money. And if you look at the stock market, there’s only been 110 year period where the, you know, the market had a had a negative rate of return that was ending in 2009. And so if you have a long enough period of time, you know, you can kind of let time be your main absorber of risk. Because if it does drop, like in 2008, and dropped, it came back and five years 2000 dropped came back in five years.
So, you know, the great depression that dropped, it came back and 14 years, but they did some things differently there that we’re not doing anymore, but you know, things can happen. But you still have to take a look at your own risk tolerance. And I have 20 some odd year olds who are very, very conservative, and that’s just the way they are and they don’t want to lose much money, if any at all. And so that again, it trumps everything else. So, you know, if I was working with you on that it’d be we’d be talking about your own personal risk tolerance. And I like to look at actual dollars, so hey, I’m going to put in $10,000 Okay, so what if it was down $1,000? What if it was down $2,000 where’s the breaking point? What dollar amount to you get to when you say I got to get out? Because then you know that portfolio was maybe too aggressive for you. So again, it does revolve back to your own personal kind of outlook on risk.