Quick Preview:
When it comes to investing, there are three primary places to contribute your money based on your goals and your risk tolerance. We call these the three worlds of money and today we’ll break down each of them for you.
On This Episode:
When it comes to investing, we get asked all the time where a client’s money should go. Does it make more sense to use a traditional savings vehicle or take on more risk in the stock market? And is there an option in between the two.
Investment strategy will always vary from person to person. Determining what fits you best is based on a number of factors, including your tolerance for risk and what stage of the retirement planning process you’re in.
On this episode of the Cornerstone Retirement Blueprint Podcast, Kyle Kirwan joins Jammie Avila to explain the three worlds of money in investing. If you haven’t heard of this before, the worlds are Banking (safety), Wall Street (risk/opportunity), and Insurance. Each has its own pros and cons and there isn’t a one-size-fits-all approach for investing so don’t let someone convince you otherwise.
Banking will always be the most conservative approach for your money but will not yield the highest results. We’ll tell you what clients typically choose this route.
As you can guess, Wall Street is going to be the riskiest. Just look at what’s happened in 2020. You need to be comfortable with a certain level of risk to go this route, but it has the potential for the best returns.
And then there’s insurance or annuities. This is the best of both worlds. A mix of conservative investing with a little risk.
We’ll break down each of these and leave you with a much greater understanding of the three worlds by the time the show is over. Knowing more about this topic will also help you know what type of investor you are as well.
The market will always end up retracting down when cycles come, but it typically and it always in the last 100 years has soared to new heights.
Timestamps:
0:48 – Why we’re talking about the three worlds of money.
1:28 – Here are the three worlds.
2:27 – World 1: Banking – what are the best uses?
4:45 – What we call ‘Dry Powder’
6:08 – The pros and cons to the banking world.
7:13 – World 2: Wall Street
8:07 – The market moves up and down, but does it stay down?
8:43 – Cons of the market
12:01 – Why being overleveraged can create problems.
14:06 – World 3: Insurance – best of both worlds
16:41 – Understanding the three worlds helps you know what kind of investor you are.
