Thank you for joining us for episode 52 of our Money Wisdom Question Series. Today’s question is, “Are stocks good retirement investments?”

It Depends On Your Goals for Retirement

Stocks can be good retirement investments, but you need to consider:

• What are your retirement goals?
• What is your risk tolerance?
• What are your needs in retirement?

It’s not as simple as, “Well, you retired, so you shouldn’t have money in the market because that’s too risky.” It all depends on what you’re trying to accomplish.

The Difference Between Gambling and Investing

Sometimes people ask what stocks they should buy today. What they’re asking me is, “What stock should I buy today that I can own for a couple of days and make a bunch of money?” The answer is none! That’s gambling, it’s not investing. Warren Buffett said he wouldn’t own a stock for 10 minutes if he wasn’t comfortable owning it for 10 years. That’s how you invest.

Investing is a Long-Term Plan

Those of us that have been in the market and who watch the market knows that there are times when it’s up and times when it’s down. One thing you do have to take into consideration is that you’ve never retired before. And though maybe you lost money on paper, as they say, while you were working. If you stayed the course, you likely made that money back. However, you’ve never been retired before and lost money, so you don’t know psychologically how that’s going to impact you. But where a lot of people find discomfort or make mistakes is as a result of panicking. If you’ve heard Joel and I talk about while the market did this today and what should you do, we always say don’t panic and look at your plan. Now, a lot of people panic because they don’t have a plan.

Stocks as a Part of Your Retirement Plan

Stocks can be a fantastic tool. You certainly don’t want to leave all your money in the bank if you’re trying to grow it, because it’s not going to. However, if you take too much risk with your money and you lose money that you didn’t need to lose in the first place, that’s not good either. Don’t completely rule out stocks, but certainly look at the entirety of what you’re doing. The reason we build our Money Map one-page plans is because all these different moving parts and different accounts boil down to one account, which is your financial life and your financial plan. And we think you should try to make sure that each element of that plan is adding value to the overall goal.

Maybe stocks make sense for you, or maybe they don’t, but growth is something that you need most likely. Either way, you should consider your goals while you plan, no matter what phase of life you’re in.

Thanks for joining me and I hope you found this information helpful!

P.P.S. Feel free to submit questions here for a chance to have them answered!