IFB156: Q&A – Dripping Into Retirement, Lump Sum Investment After the Pandemic

Announcer (00:00):

You’re tuned in to the Investing for Beginners podcast. Finally, step by step premium investment guidance for beginners led by Andrew Sather and Dave Ahern. To decode industry jargon, silence crippling confusion, and help you overcome emotions by looking at the numbers, your path to financial freedom starts now.

Dave (00:36):

All right, folks, welcome to Investing for Beginners podcast. This is Episode 156 tonight, Andrew and I are going to take a few moments, answer some listener questions. We’ve got another great batch of them this weekend. So we wanted to take a little bit of time to answer those for you guys on the air. So I’m going to go ahead and read the first question, and then I’ll throw it over to Andrew, and then we’ll do a little give and take. So first I have, hi Andrew. I’ve been listening to your archived podcast for the last few weeks, and I like what I hear. Long story short. I’m coming late to the party. I’m 61, and some inherited stocks and mutual funds for my parents. I’ve just let them sit and ride for the past couple of decades. And they’ve done very well. This COVID market crash got me interested in investing in some value stocks that have hit bottoms through no fault of their own. I’ve already made some small missteps and what to avoid more. My question is, at my age, is it too late to realize much profit from drip? I’m in good health, but logically we’ll need to rely on savings and portfolio balances within ten years. Thanks, Diana. Andrew, what are your thoughts on her question?

Andrew (01:39):

Well, I think it’s a question that’s impossible to answer. We don’t know what percentage of the money is in stocks versus mutual funds versus, you know, how much is there in cash. I think maybe we can put ourselves in, in the footsteps of maybe let’s take two different scenarios. This is not professional advice or anything, but you know, how would I react now? So maybe firstly, how would I react if I had, let’s say, I don’t know. I don’t know what the numbers are. Let’s say a $500,000 and stocks and mutual funds. And let’s say that that’s supposed to fund my retirement and I’m going to retire in 10 years in a situation like that. I think generally anybody who knows about personal finance has learned about it, been educated. They’ll generally tell you the closer you get to retirement, the more you want money in bonds versus stocks.

Andrew (02:53):

And the reason for that’s very simple, the stock market has gone up for a very long time, and over the very long term, it’s gone up for a very long time. And the reason for that is because there are very few things in the world, like a public corporation and businesses and the ability for businesses and people inside of businesses to grow businesses, to create more cash flows and serve more customers. And there’s nothing like that. And so as condominiums have grown and as busin...