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Mark Lloyd: Use 'time horizon' to invest well

Founded in 1994 by Mark Lloyd, The Lloyd Group, Inc. serves the distinctive financial needs of those nearing retirement and those already retired. "Focus On Retirement," a weekly radio show hosted by Mark Lloyd can be heard  in Athens on 1340 AM WGAU Saturdays at 11 a.m. and in Gainesville on 103.7 FM WXKT Saturdays at 9:30 a.m. and Sundays at 7:30 a.m. To learn more about The Lloyd Group, Inc., call 770-932-0387 or go to www.thelloydgroupinc.com.

Founded in 1994 by Mark Lloyd, The Lloyd Group, Inc. serves the distinctive financial needs of those nearing retirement and those already retired. "Focus On Retirement," a weekly radio show hosted by Mark Lloyd can be heard in Athens on 1340 AM WGAU Saturdays at 11 a.m. and in Gainesville on 103.7 FM WXKT Saturdays at 9:30 a.m. and Sundays at 7:30 a.m. To learn more about The Lloyd Group, Inc., call 770-932-0387 or go to www.thelloydgroupinc.com.

Wild swings on Wall Street. A national debt out of control with trade issues and a European debt crisis not far behind. Stubborn unemployment. Crumbling home values. The question has become for many investors — what exactly is going on here?

In times like these, you may be tempted to stuff your money under the mattress or bury it in the backyard. But, unfortunately, that only yields moldy money -- if the groundhogs don't carry it away.

In addition, that strategy won't grow assets over time. It won't provide for the big things in life like a home, starting a business, the kid's college education or retirement.

Yes, these are frantic financial times, with more bad news than good likely in the immediate future. However, doing nothing is the worst strategy of all. Instead, you must take a step back and create a financial game plan that is best suited for your needs and age. As I explain to my clients, you must understand and act on your own time horizon -- which still remains one of the best approaches to investing.

No time like the present. It is only natural to think and plan in segments of time. Financial time horizons are typically of two varieties. Time horizons that are goal specific. I need to save and invest to buy a new car or home; to have funds for my children's college education. In that case, we determine how much we need, how far into the future and how to get there. Lifetime Time Horizons are how we can best plan for a secure financial future in retirement depending on where we are along life's arc. Years "to go" count, along with many other factors, including expenses, lifestyle needs and goals. I'm going to reverse the usual order of things and make seniors the first served.

Keeping those golden years golden. Short time span to invest. Those already retired generally need a certain amount of current income to supplement sources like pensions, annuities and Social Security. This need for current income allies with the general principle that the sooner we need our assets to work for us (payout), the less investment risk we should take. This means retirees should gravitate toward fixed income products that offer protection of principle in the market, along with equities that are truly diversified. This offers a more balanced approach for the investor.

On the plus side, retirees needn't worry about the solvency of programs like Social Security and Medicare, we pray. Unfortunately, future generations will. Of course, the kicker is that seniors are living longer -- and health care costs keep soaring 15 percent each year and more.

Established career folks. Mid-range time span. These folks have a home, family and an existing investment fund, often a 401K through their employer. Sadly, given these tumultuous times, some retirement nest eggs have turned into a rat's nest. These investors can embrace more risk than retirees, as they have longer to recoup losses. Over time, a smartly invested portfolio of equities has outperformed inflation and provided overall excellent growth in assets. That means if you are smartly invested in equities; don't panic and don't chase bubbles, and avoid volatile assets like gold, silver, commodities and long bonds. Keep in mind, if you own a diversified portfolio of equities you already have some existing exposure to commodities; there is no need to "double down" in those asset categories.

Early career folks. The most to gain, the most to lose. Conventional investing wisdom has always said that those with a longer Time Horizon, measured in decades, can be aggressive in their style -- and should be to take advantage of long term market gains. Thus, for those with a long Time Horizon, 20 years and more, we recommend no more than 75 percent in equities, 25 percent in fixed income investments.

The days ahead. No question -- there are some rocky roads ahead. The economic outlook through the balance of 2011 doesn't look great. Many of our nation's economic woes were a long time in developing and they unfortunately won't be solved overnight. Still, the US remains the world's most potent marketplace and free enterprise incubator.

While inflation has remained almost historically low, we can't count on that continuing in the future. Instead, start with your appropriate Time Horizon, seek sound counsel -- or a second financial opinion -- to ensure you have a rock-solid investment plan in place. Most importantly, don't be afraid to make changes as your situation as our economy presents unprecedented challenges. Today, investors can't rely upon anyone else for their financial success -- they must rely on their own vigilance and obtain trusted advice and education to help secure their plans for the future.

Mark Lloyd is founder of The Lloyd Group, Inc., which serves the distinct financial needs of the nearly- and already retired.

Comments

kevin 2 years, 11 months ago

All this time-line business is mostly talk to make money on all the trades. Sooner or later, no matter how far out your time-line is, you will no longer have a time-line and will need to draw it out. Times-lines may be good if you are talking 15-25 yrs. Unless our government changes course, take the safe route and plant your cash in CD's or something secure. I would like to see the time-lines and portfolios of these stock brokers.

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