GRADUATIONS AND YOUR MONEY
As originally appeared in The Jerusalem Post on June 15, 2017.
You must realize that honorary degrees are given generally to people whose SAT scores were too low to get them into schools the regular way. As a matter of fact, it was my SAT scores that led me into my present vocation in life, comedy. Neil Simon
My Facebook feed has been full of pictures of my friend’s children graduating various educational facilities. My children keep laughing when I show them pictures of graduates wearing their caps and gowns. Obviously, as Israel is just a tad bit less formal than most western countries, it’s a stretch to get graduates here to wear socks and ditch the sandals! Outside of Israel, most graduations have already taken place. But here we are about to embark on two weeks of pageantry, little chairs and rhymed speeches given by parents as they present gifts to teachers.
For those of you with young children in gan, it’s time for the Mesibat Siyum- end of year pageant. This is where you get the opportunity to squeeze your adult body into a chair meant for a 4-5 year old for 2 hours. As my back is unable to meet that challenge I have always chosen to stand in the back and video the event.
On a personal note, we actually are celebrating the graduation of two children. Our oldest son is finishing up 8th grade and headed for high school and our youngest child is finishing gan and going to first grade. In addition, as this is our baby, it means no more kids in gan. This brings mixed emotions. On the one hand it means all of our children are getting older and getting closer to heading out to make their own way in the world which is exciting and the other hand it means that all of our children are getting older and getting closer to heading out to make their own way in the world which is sad in some respects.
Money
Don’t worry that is about as emotional as I ever get! You are probably wondering what any of this has to do with your money. The answer is quite simple. Investors need to focus on the long-term. Just like when raising kids we may be nervous in the short-term, and not overjoyed when a child brings home a 70 on some geography test, but if we take a slightly longer view we realize that whether or not the child gets the 70 or knows the dance moves at the Mesibat Siyum, it’s pretty irrelevant to adulthood. Investing is similar. Don’t get caught up in short-term market movements and get scared if the market drops 5%. I may sound like a broken record but markets have corrections frequently and it’s the investor that doesn’t get all nervous and panic that makes money and builds wealth over time.
Mark Hulbert writes, “If you think you will know it when this bull market finally comes to an end, you are kidding yourself. The vast majority of professional advisers who try to get in and out of the stock market at the right time end up doing worse than those who simply buy and hold through bull and bear markets alike. Even those few who beat a buy-and-hold strategy during one period rarely beat it in the next one.”
If professional investors are lousy at timing the market why would individual investors think they can do better? As I wrote about last week, due to all the craziness happening in the world right now I have received calls from clients worried about a stock market crash. My response to them is that 1- markets rarely crash and I wouldn’t be too worried about it and 2- if they are worried about it, it means that have an incorrect asset-allocation. It means that they have too much exposure to the stock market. If you can’t afford short-term losses in your stock portfolio, you need a more conservative approach.
Speak with your financial advisor to make sure that your portfolio is in line with your short and long-term goals and needs, and make sure that it is allocated correctly to achieve those goals.
Mazel tov to all the graduates!
The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group, Inc. or its affiliates.
Aaron Katsman is the author of the book Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing (McGraw-Hill), and is a licensed financial professional both in the United States and Israel and helps people who open investment accounts in the United States. Securities are offered through Portfolio Resources Group, Inc. (www.prginc.net). Member FINRA, SIPC, MSRB, FSI. For more information, call (02) 624-0995 visit www.aaronkatsman.com or email aaron@lighthousecapital.co.il.
