Focus on value over the long term video

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Video transcript

Welcome to the forth video in our series

Focus on value over the long term

This video focuses on building the proper foundation for your retirement strategy

In our previous videos, you learned:

  • How to navigate your path to retirement
  • How to determine your lifestyle and reserve requirements in retirement – how this would drive your ultimate retirement number and your approach to get there
  • How to make sure your retirement lasts, and to make sure your retirement factors in planned and unplanned expenses and events

Next, we’ll cover the type of investment strategy that will help you make sure you get to retirement

Key #3 – Focus on value over the long term

In order to focus on value,

  • Your strategy should start with a strong focus on quality instruments that can perform over time and across many different types of market cycles
  • Short term oriented investments can be dangerous to your long-term retirement strategy – both in terms of distracting from more sound investments, and in creating downside risk to your portfolio
  • You also need to understand when long-term assets of inherent value can be bought at a favorable price 

Value combines timeless principles with current opportunities and macro-trends.

  • The foundation of value is timeless – in other words, ask yourself if the underlying asset is inherently capable of creating an ongoing return
  • Market shifts, opportunities and innovation can shift the sectors where value is going – and these shifts can happen slowly over time, or quickly and seemingly all at once – like we witnessed during the pandemic
  • Your team of financial and investment advisors needs to be able to understand current opportunities within the context of long term value creation

Follow shifts in value production across markets.

  • As macro trends play out and markets evolve – and especially as value shifts across sectors, it’s important to make sure your investments evolve to keep up
  • Be wary of “overnight success” assets that suddenly gain hype
  • Investing in these flashy assets can create major gains for some in the very short term – but without a fundamental underpinning of value, they can create excess risk in an otherwise well-thought-out portfolio
  • Over time, the damage they can cause your portfolio can outweigh the risk
  • Likewise, your investment team should incorporate assets that have value generating potential over the long term – and across many different market conditions

In terms of Value Picking.

  • There are principles you can use to separate value-based investments from other opportunities

If you’d like to learn more about how our team can help you integrate the optimal approach into your strategy, click the button below to get matched with an experienced financial advisor who can help you figure out the right approach now 

How to orient for the long term. There are some simple core principles that can help make sure your retirement strategy is properly oriented for the long term

  • Don’t chase short term gains – instead focus on growth over time
  • Don’t react to every fluctuation in the market
  • Do respond to market changes that set up opportunities for longer-term growth
  • Manage for long term risk / reward – making sure your risk tolerance stays aligned with your investments as your needs evolve

Incorporate smart risk.

  • On longer-term horizons, certain investment vehicles like stocks that incorporate risk will outperform investments like bonds that have lower risk. 
  • You can incorporate these investments to grow your portfolio – you just need to be careful to balance the risk over the timeframe of your investments. In fact, if the timeframe is long enough – a portfolio too heavily weighted in low-risk investments could have trouble delivering enough gains to reach your ultimate goal.

Evolve your strategy as your goals change.

  • As you approach retirement – and as you go through retirement – your needs will continue to evolve – both in terms of risk tolerance and cashflow
  • As this evolution happens, it’s important to adjust the balance of investments in your account to accurately reflect your current tolerance for risk, as well as your current timeframe for accumulation and use of the capital in your accounts

Let’s quickly summarize:

  • Value is about choosing investments that can deliver consistent returns over time
  • Acquiring value-based investments when they are at a discount can help increase returns over time
  • Macro-trends can shift which sectors can deliver the most value – but the principles remain the same
  • Incorporating smart-risk is the key to driving growth over the long term
  • Your strategy should be rebalanced over time – and should evolve as your needs change

When it comes to planning your retirement, the new landscape certainly introduces new challenges – but it also comes along with new opportunities to thrive over the long term.

  • Even with all of the changes that happened during the pandemic – the same fundamentals that drive successful planning for retirement still apply – now more than ever
  • Navigating retirement is a complex endeavor – 
  • but with the right focus on fundamentals, you can feel confident about your strategy

For a tailored approach, click the button below to connect with an experienced Edward Jones Financial Advisor who will partner with you to create a long-term personalized strategy to help you achieve your retirement goals.

Thanks for watching – and we’ll see you in the next video

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