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I had a MILLENNIAL moment and it was awesome!

No, no, no, I don't mean I went to a hookah party, tried on a snazzy pair of Warby Parker's, or binged on quinoa at a Whole Foods salad bar . In fact, if I were a millennial, I think I'd be mildly annoyed by that title. I sure didn't like being stereotyped a Gen-X'er, but such as the "apply a general label to everything" world we live in.

What I really mean is that I had the privilege of being quoted by Acorns, ( www.Acorns.com), an investment and personal finance website that is popular with my younger brethren (trying to avoid the M word here). More specifically, I was asked by a financial journalist, Joe D'Allegro (a great guy who you could follow @JoeOfHappiness) , to comment on an article explaining how a prudent individual might invest some money, based on various time frames and goals.  

Now, there is a lot to say about personal finance and much of it is nothing new; its a very slowly evolving topic. And you can't include everything and everyone's take on it in one article. So, I wanted to share all of my comments on the topic above because I am asked about this too often not to list them. So, here goes:

There's only one way to invest an emergency fund. And the answer is don't invest those funds. It should be in cash equivalents in a checking or savings account. Don't concern yourself that you're not earning any return on these funds. Your goal needs to be preservation and liquidity. Preservation means putting the money into something that shouldn't lose value; something that is very low risk. This way, the money will be there when you need it for an emergency and believe me, we all have those. By liquidity, I mean that you can get use of the money immediately for an urgent and timely need.
For a goal that is a year or less away, I'm going to have to bore you with the same advice I just gave for the emergency fund. For example, if your planned vacation costs $2,000.00, maybe you could earn a little extra return on that amount. Let's say you invested wisely and now your $2,000.00 is worth 2,200.00. Hey, an extra 10% isn't too bad. But will it change your life? No way. On the flip side, the $2,000.00 could decline by 10% because even if you chose an excellent investment, you got the timing wrong. Now, you're in a position of only having $1,800.00 to spend on your vacay and you'll say to yourself "I could've enjoyed that money". But please notice this is money for a short term need. If you had a longer time frame,  you'd be better positioned to absorb that $200.00 hit because you could give your investment time to recover. A near-term deadline takes away your ability to let the investment work over time. You know the expression "time heals all wounds"? In the world of investing, time won't heal all wounds, but it often bails you out of near term losses. Remember, time is only your ally when you have lots if it.
A one to two year time horizon? Well, this gets a little dicey because you are now giving yourself more time to recover from a dip in the value of your investment account, but not much. Let's say that the goal for this one to two year time frame is to buy yourself a car. I would air on the side of caution. First, you never know when the stock market could get clawed by a brutal bear, which could leave you well short of your goal, even if you saved enough money in the first place - a losing investment account could set you back big-time for a near term goal. Second, if you get a good deal on the car you want within only 12 or 13 months, you'll want to be in cash so you'll be ready to pounce and drive that cream-puff home.
If you've dedicated yourself to buying a home in a few years, I am still airing on the side of caution. You are already taking a gamble on housing prices and mortgage rates. Do you also want to take a shot on stocks with your down payment money too? I know this is a broad range, but if you are planning a major purchase in 3 years or less, I really want you to be in cash equivalents. Keep those funds in a checking account, a CD, or something very safe and stable. If the goal is 5 years or more away, then invest some of it in stocks. You can go with ETF's, mutual funds, or individual stocks. Regardless, you have to know what can happen in a bad situation. The major averages have dipped by about 50% twice in the last 16 years. Each time, markets recovered. But if your purchase coincides with a severely down stock market and you didn't already move said funds into cash equivalents, you may find yourself unable to afford the home you wanted or worse, you may no longer be able to purchase any home at all. Remember, the stock market usually doesn't correct in a bubble. There are other economic events happening concurrently such as a potential recession, which may affect your income as well via pay cuts or layoffs.
The bottom line from my perspective is that money set aside for any goal that you are serious about that is less than 5 years away, you couldn't get hurt by playing it safe.

Back to the here and now. Here's the link to the article if you'd like:


LOL...writing makes me hungry, so I'm off to the nearest Chipotle to hang with my millennial buddies Murphy and Filippo.


I opened ClientFirst Strategy, Inc. because I believe that the only way to help my clients potentially achieve their goals is by offering unbiased advice & investment management expertise. To my clients, thank you for your continued vote of confidence. If you are not a client but would like to explore the possibility of becoming one, I invite you to call me directly, visit my website, join my email list, and/or connect with me on social media.
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All the views expressed in this report/commentary accurately reflect our personal views about any and all of the subject securities or issuers and no part of our compensation was, is, or will be, directly or indirectly related to the specific recommendations or views we have expressed in this report. This material is not intended as an offer or solicitation for the purchase of sale of any security or other financial instrument. Securities, financial instruments, or strategies mentioned herein may not be suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue. Prices, values, or income from securities or investments mentioned in this report may fall against your interests, and you may get back less than the amount you invested. The information contained in this report does not constitute advice on the tax consequences of making any particular investment decision. You should consult with your tax adviser regarding your specific situation. Diversification is a method of managing risk and doesn't protect against loss in a down market. 

Mitchell O. Goldberg, AAMS, President | Investment Professional

OSJ Manager 


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