In the third and final installment of the investing miniseries, Matt Murphy and Matt Reynolds discuss the common investment products most investors will use during their lifetime. Matt breaks down the difference between active and passive fund management, and why investors over the past few decades have flocked to passive index funds, which hold a basket of stocks that mirror market indices like the S&P500 and charge very low fees.

Matt also explains a common trap that robs investors of returns: not staying invested in the market. The old adage is buy low, sell high, and when the markets are volatile and economic outlook is poor, many investors get nervous and sell their stocks... only to watch the market rebound later. Before they know it, the market bounces back to higher levels than before, and to get back in the game they must now buy in at a higher price. Of course, there's no guarantee that the market will bounce back, or when it will bounce back, but in general, attempting to time the market results in substantially lower returns in the long run compared to simply staying invested and following your strategy, with periodic rebalancing to ensure your portfolio matches your risk tolerance.

As always, patience is the key to successful investing! Armed with some basic knowledge, you can make sound investments for your retirement without complicated strategies or esoteric investment products.

Follow Matt Murphy

Web: https://www.benetaswealth.com

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LinkedIn: https://www.linkedin.com/in/mattmurphycfp

Advisory services offered through Commonwealth Financial Network®, a Registered Investment Adviser.

This material is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.

Investments are subject to risk, including the loss of principal. Some investments are not suitable for all investors, and there is no guarantee that any investing goal will be met. Past performance is no guarantee of future results.

All indices are unmanaged and investors cannot invest directly into an index.

Investments in target-date funds are subject to the risks of their underlying holdings. The year in the fund name refers to the approximate year (the target date) when an investor in the fund would retire and leave the workforce. The fund will gradually shift its emphasis from more aggressive investments to more conservative investments based on its respective target date. The performance of an investment in a target-date fund is not guaranteed at any time, including on or after the target date.
Diversification does not assure a profit or protect against loss in declining markets, and diversification cannot guarantee that any objective or goal will be achieved.

Exchange-traded funds (ETFs) are subject to market volatility, including
the risks of their underlying investments. They are not individually redeemable from the fund and are bought and sold at the current market price, which may be above or below their net asset value.

Matt and Matt team up again for another Q&A episode, this time focused on how to get started with investing. Matt Murphy clarifies basic investing terms you need to know, such as stocks and equities, bonds and fixed income, and lays out the basic roadmap for investing through your lifetime. The key word with all things investing: patience. Results (wealth) from investing come from repeated good decisions over a period of many years. The process can be very simple, but for many it is difficult to remain calm and stick to your plan when the markets take a dive (which they will at some point) and the media is fear mongering about the stock market. Likewise, it's easy to chase trends and hot tips, only to be the one who bought high and sold low with a particular investment.

Matt also explains the basics of asset allocation, choosing the right mix of stocks and bonds to fit your personal risk profile and your position in life. Asset allocation for a young person likely will lean heavily, perhaps entirely, into stocks, because a young person has a long time horizon for investing and can withstand year to year fluctuations in the stock market. On the other hand, someone nearing retirement needs to know that the value of their portfolio won't vary substantially, since they will be planning to withdraw from that portfolio for living expenses in retirment. That person will likely invest more heavily in bonds, which pay a fixed interest rate and whose value fluctuates much less than stocks.

This is part one of three in this mini-investing series -- in the following episodes Matt will dive deeper into the types of investment accounts, how to pick investments for your portfolio and how to maintain them over time.

Follow Matt Murphy

Web: https://www.benetaswealth.com

Newsletter: http://eepurl.com/jb7SNc

LinkedIn: https://www.linkedin.com/in/mattmurphycfp

Advisory services offered through Commonwealth Financial Network®, a Registered Investment Adviser.

This material is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.

Investments are subject to risk, including the loss of principal. Some investments are not suitable for all investors, and there is no guarantee that any investing goal will be met. Past performance is no guarantee of future results.

Exchange-traded funds (ETFs) are subject to market volatility, including
the risks of their underlying investments. They are not individually redeemable from the fund and are bought and sold at the current market price, which may be above or below their net asset value.