What’s Your Investment Horizon: Short-Term vs. Long-Term Goals?

Today, we're diving into the nitty-gritty of investing for both short and long-term goals. You know that feeling when you’re not sure if you should stash cash for that upcoming vacation or let it ride for retirement? Yeah, we’ve all been there, right? The key takeaway? Your timeline totally changes the game. We’ll chat about why mixing short-term needs with long-term dreams can create a financial mess and how to keep your money in the right buckets. So, grab your favorite drink, kick back, and let's get this investing party started as we tackle What’s Your Investment Horizon: Short-Term vs. Long-Term Goals?
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Navigating the world of investing can feel like trying to find your way through a maze blindfolded. We kicked things off today with a hot topic: how do we know if we should be investing for short-term goals or playing the long game? Let's be real, we've all felt that anxiety of not being sure if we're making the right moves. From vacation funds to emergency savings, short-term goals are right around the corner, while long-term dreams like retirement take a bit more patience. So, what’s the deal with timelines? They’re everything. When you invest with intention, it’s like turning the lights on in that maze—suddenly you see where you're going! The crux of our convo? Your investment horizon dictates your approach. We shared some real-life tales, like my mother-in-law's situation, where mixing short and long-term funds led to some serious financial headaches. The takeaway? Keep those buckets separate, and you'll be dancing in the rain instead of dodging financial storms.
Next up, we dove into the nitty-gritty of short-term investments. If you need cash in the next year or two, safety and accessibility are your best buddies. High-yield savings accounts, CDs, and money market accounts are great options to keep your cash safe while you plan for that new car or house. Then, we switched gears to long-term investing, which is all about embracing risk and riding out market fluctuations. When you’ve got decades to spare, you can afford to let your investments grow, and we all know the stock market loves a good comeback story. By keeping your short-term cash safe and letting your long-term funds ride the wave, you're setting yourself up for financial success. So, whether you’re planning for a trip to Hawaii or saving for your kids’ college, remember: clarity in your investment strategy leads to confidence in your financial future!
Takeaways:
- Investing for short-term goals requires a different strategy than for long-term ones, trust me.
- Mixing short-term and long-term investments can lead to serious financial stress and losses, that's a fact.
- Your investment timeline is crucial; understand the difference between what you need now and later.
- Short-term money needs to be accessible and safe, while long-term money can ride the market's ups and downs.
- Avoid the mistake of treating short and long-term goals the same way—it can cost you big time.
- Aligning your investment horizon with your financial goals can boost your confidence significantly.
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00:00 - Untitled
00:00 - Investing for Short Term vs Long Term Goals
00:18 - Understanding Investment Horizons
04:07 - Transitioning from Short-Term to Long-Term Investment Strategies
06:28 - Planning for Financial Success
09:32 - Introduction to Financial Confidence
Here's a great question to start today's show, Ralph, how do I know if I should be investing for short term goals or long term ones? I feel like I'm always getting it wrong. And you might be feeling that same thing too, trust me. And I've felt that from time to time as well.The truth is, some goals are right around the corner, like that vacation. Maybe you're going to be replacing that with a new car or maybe even that emergency fund that we've talked about on the show so many times.But other goals, they're years, maybe even decades away, like retirement or sending your kids to college. And here's the truth about investing. Your timeline changes everything. Let's talk about that on today's show.This is Financially Confident Christian, your daily dose of gospel, grounded insight and faith driven tips to help you break the cycle of financial shame with confidence. Hello there. Welcome to Financially Confident Christian. I'm Ralph. I am so happy that you've chosen to join me today.If you missed yesterday's show, we've been working in this series of investing and yesterday we talked about risk and reward. So if you missed yesterday's show, I'm going to encourage you to go check it out.You can do that at financiallyconfidentchristian.com I've worked with clients for over 30 years and I've helped families and business owners match their money to their goals. And that's really what I want to talk about today. And one of the biggest mistakes that I seen, I've seen this day in and day out.So many people, you might be one of these people right now. They treat short term and long term goals the same way. And when you do that, it leads to stress, it leads to fear, and so often it leads to loss.But here's the truth. When you align your horizon with your investments, guess what follows? Confidence follows. Let's talk about some confidence today.Clients once told me, they said, Ralph, I put my emergency savings into the stock market and then the market dipped right when I needed the money. Well, let me just tell you right now, not a wise decision. That emergency fund needs to be available as an emergency, not in the market.And see, that's the real danger in mixing investment horizons. Here's the truth. Short term money should be safe and accessible. That is so very important.Those things that you need to have right away need to be invested in short term things. Now long term money can ride the ups and downs of the market and really go find that growth and friend.Once you understand the difference between short term and long term investing becomes a whole lot clearer. So let's get into that today.If you need that money in one to three, hey, maybe you need it in one to three months, but if you need it in one to three years, here's my investment advice right now. Don't risk it. As an example, my mother in law, she suffers with dementia and her money was all invested in the market.And my wife and I sat down about, I don't know, about eight months ago and we said, listen, mom's not getting any better. She may need this money right now. She's in skilled nursing care and she needs that money right away.So we got in touch with the investment advisor, said, listen, we're going to take things out of the market because we need to have more of a short term focus on these things. So what do we do? We move those things from those speculative investments.And of course the money manager is like, wait a minute, Ralph, you're going to be giving away such big rewards as we talked about yesterday, high risk, high rewards, low risk, low rewards. But the time investment horizon is short. She needs that money right now.So if you find yourself needing those short term things, that emergency fund, maybe you're buying a car in six months, maybe you're buying a house in a year.If you find yourself in that one to three year time horizon, this is the time to keep that in a high yield savings account, maybe a money market account. CDs are great for this. You can buy and ladder CDs at 3 months, 6 months, 9 months, a year, whatever that works for you.Or of course there's the traditional money market accounts. The goal with short term investments is stability, not growth. Of course there's a risk reward for that.If you invest the money in short term, there's going to be a lower reward. But it's not about growth and it's about stability. Let's focus a little bit on long term goals. Those long term goals can handle growth. That's fine.That's the money that you can afford to risk in the market. So if you've got a goal of 10, 20, maybe even 30 years away. Listen, I just turned 53 a couple of days ago.I remember when my investment horizon was when I retired in 30 or 40 years, it's getting a lot shorter for me. But when you're at the beginning of that, when you've got that time Horizon in that 10, 20 or 30 years, you can afford to take more risk. Why?Because you've got time to recover. As many people preach about in the market, you got to take that long term view.So many people get stuck in that looking at that statement every month. Oh, my investments are floundering. Ralph, don't worry so much. We talked yesterday about risk and rewards. I'm hoping you can tolerate those things.I hope you've made the decisions that's balanced for you. But realize if this is long term money, don't worry about it. You've got time for the market to recover.This is a great place for stocks and index funds and Those individual retirement accounts, 401ks, 403bs, all of those things that make sense here because time will smooth out the bumps and those rises and falls in the market because you don't need that money next week. If the market takes a downturn, you can kind of sit on the sideline and wait for that. And here's the problem.So many people that I've worked with mix the two and create these massive problems. If you don't understand short term and long term money, if you confuse those two things and it becomes dangerous.A couple of days ago I talked about being in the market feels like you're gambling. When you mix these two things, you are most definitely gambling. And that's how people end up with selling investments too soon.Like that couple I talked about, they didn't understand that they needed that money for their emergency fund right away. So when the market took a hit and they needed that money, they had to sell the investments too soon and they lost a ton of money.Also, if you've got things that you don't need right away, you got those things that really could be long term and you've got them parked. In short term things, you're missing growth opportunities. It works both ways. And you got to understand the two.The thing is, with these short term decisions, you could lose your money when you actually need it. So you got to learn to keep those buckets separate.If you don't hear anything else I say today, understand the difference between short term and long term and keep those buckets separate. Let's get into the Bible a little bit. The book of Proverbs, chapter 24:27 puts it this way. Put your outdoor work in order and get your fields ready.After that, build your house. Now you might say, Ralph, that has nothing to do with what we're talking about, but it does. God calls us to plan in order.He calls us to prepare for today and then wisely build for tomorrow. Well, investments work the same way. If you've got to prepare for tomorrow. Those are your short term investments.When you're preparing for later, that's your stuff you're building and you're planning for tomorrow. So this ties right into scripture.As you know, I always bring that to you because I want to tie the advice that I give you directly into the biblical principles of stewardship. And this one just nails it. So here's a practical system. I want to give you some practicality today. Here's what I encourage you to do.First thing you've got to do, write down your goals. What are those goals? Maybe you've got to buy that car. Maybe you're going to be putting money away from for a down payment for a home.Maybe you've got a kid starting college. Write down all of those financial goals and then right next to each one, assign a timeline to that. Is that short term?Really put in the months, years, whatever those things are and assign a timeline to that. And then once you do that, then match that investment to that time horizon. Now listen, this isn't one of those things that you just set and forget.This is something you should be examining every three, six, nine, or maybe even once a year. 6. Sit down with yourself. If you've got a financial advisor, sit down with them and go through that goal list.Because maybe some goals have changed, maybe you've added some, maybe some things that need to flex a little bit. But be simple, be practical and live in peace with this. How about we pray together? Heavenly Father, thank You for teaching us to plan wisely.We saw that in scripture and help us to do that. Help us to see the difference between what we need today and what we're building for tomorrow.Give us patience to prepare for the long term and the wisdom to keep short term needs safe. Above all, remind us that our future is secure in You, not in the market, not in what's in our bank account, and not in the things that we have.And we ask this in complete confidence. In Jesus name we pray, Amen. Now you notice I've been starting to show the questions.I've been getting a ton of questions and I want to encourage you right now, send your questions to me.The easiest way to do that is if you go to the website justaskraft.com, you'll have a place there to put your name and your question because I'd love to feature it on today's show because I want to answer the questions that are getting to you, the things that you really want to understand about now as we're talking about that. Tomorrow we're going to go and simplify things even further. Tomorrow I'm going to talk about stocks. I'm going to demystify stocks.I'm going to tell you what they are and how they work. It is going to be a great show. I'm going to talk about it in plain English. So many people have complimented me.They said, Ralph, you'll explain things in terms that I can understand. No Wall street jargon tomorrow, just simple terms. What is a stock and. And how do I invest in those things.So make sure you join me on tomorrow's show. And if you've struggled to match your goals with your money, let me help you take that next step. I just finished writing my third book.It's called How to Become a Financially Confident Christian. And I would love to give you a copy that you can download absolutely free.It'll be a great place to start your journey into actually becoming a financially confident Christian. And it's yours absolutely free.Just go to this website, financiallyconfidentchristian.com/becoming it's packed with encouragement to help you invest with clarity and peace. And listen, it takes over 30 years of the stories, the people that I've worked with and really lays it out there in black and white.So again, go get that book. It's absolutely free. No strings attached. financiallyconfidentchristian.com/becoming and I really hope you do that now.Today, I want you to go out there and live like a financially confident Christian. I have confidence in you.More importantly than me having confidence in you, God has confidence in you and he wants you to be successful in in your financial life. So stay financially savvy out there. God bless you. And you have a great day today.