As Thanksgiving approaches, conversations often shift to more personal topics once the turkey has been carved. Finance isn’t usually the centerpiece, but this cozy season provides a wonderful backdrop for discussing financial health. As financial advisors, we often find ourselves answering the same questions around this time of year. Let's dive into the top five financial topics that tend to come up during these festive gatherings.
The Case for Long-Term Investing
When it comes to investing, patience truly is a virtue. During the hustle and bustle of the season, we like to remind folks to resist the urge to time the market. Sticking to a long-term plan can help ride out market volatility and focus on consistent growth.
Principles of Financial Independence
True financial freedom means having the liberty to retire when you want. It involves living within your means, avoiding lifestyle creep, and making savvy decisions on housing. By keeping these principles in mind, you can carve your path to financial independence.
The Power of Compound Interest
Here's a classic you might already know: $10,000 invested at a 7% annual return grows to over $76,000 by age 65. This "interest on interest" effect is why starting early and being consistent are crucial. It’s never too late to harness this powerful force for your financial future.
Benchmarks for Savings Goals
When setting savings targets, aiming to save 15–20% of your income annually is a good start. As a general rule of thumb, having 1–2x your salary saved by age 35, and 10x by retirement, keeps you on track. Remember, consistency trumps perfection in savings.
The Value of Diversification
This Thanksgiving, instead of focusing on the latest hot stock, consider how spreading your investments across various asset classes can reduce risk. Diversification supports long-term stability and peace of mind.
As you enjoy this time with family and friends, think about the financial conversations you've had—or wish you had. Asking questions is a smart move toward healthier financial habits. We’re here to help continue this discussion, so feel free to reach out for more personalized advice.