Jonathan Shenkman, the President and Chief Investment Officer of Park Bridge Wealth Management, offers valuable insights on smart investing for 2025. He emphasizes a cautious approach, steering clear of chasing high returns. Shenkman discusses the importance of understanding investment time horizons and tailoring strategies based on individual goals. He also highlights short-term options and the significance of automation in investment decisions, alongside promoting informed charitable giving linked to tax benefits for better financial outcomes.
Investors should approach promises of high returns with skepticism, focusing instead on slow and steady investments for long-term financial stability.
Understanding your investment time horizon is crucial; short-term needs require safer investments, while long-term goals can accommodate stocks for growth.
Staying disciplined amid market fluctuations is essential, as emotional reactions can impair decision-making, highlighting the need for automation and a diversified portfolio.
Deep dives
Understanding Investment Risks
Investing with the expectation of extremely high returns can lead to significant financial loss. Many individuals may be enticed by friends or acquaintances promising impressive returns on real estate investments or other ventures, but historically, these returns are often unrealistic and unsustainable. For instance, promises of 15-20% returns from someone with limited real estate experience should be approached with skepticism. It is crucial for investors to recognize that prudent, slow, and steady investments aligned with reasonable expectations are much more effective in achieving long-term financial goals.
The Importance of Time Horizon
Understanding one’s investment time horizon is vital when making financial decisions. Investors must ask themselves when they will need access to their money, which will dictate the type of investments that are appropriate. For short-term needs, such as cash required within the next three years, safe instruments like money market accounts or certificates of deposit (CDs) are often recommended. In contrast, long-term investors, especially those not retiring for decades, should focus their portfolio on stocks to ensure their investments grow adequately to outpace inflation.
Managing Cash Effectively
For funds that are projected to be needed in the short term, various options for parking cash exist, each with their own pros and cons. Money market accounts are typically favored due to their liquidity and competitive yields, although interest rates can fluctuate. CDs can also offer better rates but require the investor to lock their money away for a term, which may not suit everyone's needs. Lastly, short-term Treasury bills provide another option, appealing for their safety and government backing, but their purchasing process can be outdated and cumbersome.
Recognizing and Avoiding Pitfalls
Investors must remain vigilant and cautious of common red flags in both their investments and financial advice. Products with unreasonably high yields or mysterious fees should raise immediate concerns, as they may indicate a low-interest sweep account or other potentially misleading investment vehicles. Additionally, receiving unsolicited recommendations for risky investments should prompt critical evaluation, especially if those recommendations come from acquaintances rather than qualified professionals. Awareness of these pitfalls is essential to prevent emotional decision-making that could result in financial distress.
Long-Term Focus and Discipline in Investing
Staying disciplined and focused on long-term investment strategies is crucial, regardless of economic shifts or political changes. Emotional reactions to market fluctuations can lead to poor financial decisions, which is why automating investments and creating an investment policy statement can be advantageous. Investors are encouraged to maintain a diversified portfolio and regularly assess whether their asset allocation aligns with their financial goals. Emphasizing a long-term perspective allows investors to weather market downturns and capitalize on recovery periods, reinforcing the importance of patience in their financial journey.
Financial expert Jonathan Shenkmanshares practical insights on building and preserving wealth in 2025 and beyond.
Whether you're just starting out, approaching retirement, or simply want to refine your investment approach, this conversation is for you.
Email: Jonathan@ParkBridgeWealth.com
To listen to his podcast: https://www.parkbridgewealth.com/podcasts
His article on how to lend $: https://tinyurl.com/How2Lend2Fam
You can find @JonathanOnMoney on all your fav social networks.
The book 'Psychology of Money' is on Amazon here: https://amzn.to/3ZIqxXH
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All investment strategies and investments involve risk of loss. Nothing contained in our content, ads and videos should be construed as investment or actual life advice.
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