What’s Your Investment Horizon: Short-Term vs. Long-Term Goals?

Today, we're diving into the nitty-gritty of investing for both short and long-term goals. You know that feeling when you’re not sure if you should stash cash for that upcoming vacation or let it ride for retirement? Yeah, we’ve all been there, right? The key takeaway? Your timeline totally changes the game. We’ll chat about why mixing short-term needs with long-term dreams can create a financial mess and how to keep your money in the right buckets. So, grab your favorite drink, kick back, and let's get this investing party started as we tackle What’s Your Investment Horizon: Short-Term vs. Long-Term Goals?

Read today's blog article

Check the full podcast episode here

Navigating the world of investing can feel like trying to find your way through a maze blindfolded. We kicked things off today with a hot topic: how do we know if we should be investing for short-term goals or playing the long game? Let's be real, we've all felt that anxiety of not being sure if we're making the right moves. From vacation funds to emergency savings, short-term goals are right around the corner, while long-term dreams like retirement take a bit more patience. So, what’s the deal with timelines? They’re everything. When you invest with intention, it’s like turning the lights on in that maze—suddenly you see where you're going! The crux of our convo? Your investment horizon dictates your approach. We shared some real-life tales, like my mother-in-law's situation, where mixing short and long-term funds led to some serious financial headaches. The takeaway? Keep those buckets separate, and you'll be dancing in the rain instead of dodging financial storms.

Next up, we dove into the nitty-gritty of short-term investments. If you need cash in the next year or two, safety and accessibility are your best buddies. High-yield savings accounts, CDs, and money market accounts are great options to keep your cash safe while you plan for that new car or house. Then, we switched gears to long-term investing, which is all about embracing risk and riding out market fluctuations. When you’ve got decades to spare, you can afford to let your investments grow, and we all know the stock market loves a good comeback story. By keeping your short-term cash safe and letting your long-term funds ride the wave, you're setting yourself up for financial success. So, whether you’re planning for a trip to Hawaii or saving for your kids’ college, remember: clarity in your investment strategy leads to confidence in your financial future!

Takeaways:

• Investing for short-term goals requires a different strategy than for long-term ones, trust me.
• Mixing short-term and long-term investments can lead to serious financial stress and losses, that's a fact.
• Your investment timeline is crucial; understand the difference between what you need now and later.
• Short-term money needs to be accessible and safe, while long-term money can ride the market's ups and downs.
• Avoid the mistake of treating short and long-term goals the same way—it can cost you big time.
• Aligning your investment horizon with your financial goals can boost your confidence significantly.

Links referenced in this episode:

• financiallyconfidentchristian.com
• justaskralph.com
• financiallyconfidentchristian.com/becoming

Episode Transcript

(00:00):
Here's a great question tostart today's show, Ralph, how do
I know if I should beinvesting for short term goals or
long term ones? I feel likeI'm always getting it wrong. And
you might be feeling that samething too, trust me. And I've felt
that from time to time aswell. The truth is, some goals are
right around the corner, likethat vacation. Maybe you're going
to be replacing that with anew car or maybe even that emergency

(00:22):
fund that we've talked abouton the show so many times. But other
goals, they're years, maybeeven decades away, like retirement
or sending your kids tocollege. And here's the truth about
investing. Your timelinechanges everything. Let's talk about
that on today's show. This isFinancially Confident Christian,
your daily dose of gospel,grounded insight and faith driven

(00:45):
tips to help you break thecycle of financial shame with confidence.
Hello there. Welcome toFinancially Confident Christian.
I'm Ralph. I am so happy thatyou've chosen to join me today. If
you missed yesterday's show,we've been working in this series
of investing and yesterday wetalked about risk and reward. So
if you missed yesterday'sshow, I'm going to encourage you
to go check it out. You can dothat at financiallyconfidentchristian.com

(01:09):
I've worked with clients forover 30 years and I've helped families
and business owners matchtheir money to their goals. And that's
really what I want to talkabout today. And one of the biggest
mistakes that I seen, I'veseen this day in and day out. So
many people, you might be oneof these people right now. They treat
short term and long term goalsthe same way. And when you do that,

(01:31):
it leads to stress, it leadsto fear, and so often it leads to
loss. But here's the truth.When you align your horizon with
your investments, guess whatfollows? Confidence follows. Let's
talk about some confidencetoday. Clients once told me, they
said, Ralph, I put myemergency savings into the stock
market and then the marketdipped right when I needed the money.

(01:54):
Well, let me just tell youright now, not a wise decision. That
emergency fund needs to beavailable as an emergency, not in
the market. And see, that'sthe real danger in mixing investment
horizons. Here's the truth.Short term money should be safe and
accessible. That is so veryimportant. Those things that you

(02:16):
need to have right away needto be invested in short term things.
Now long term money can ridethe ups and downs of the market and
really go find that growth andfriend. Once you understand the difference
between short term and longterm investing becomes a whole lot
clearer. So let's get intothat today. If you need that money
in one to three, hey, maybeyou need it in one to three months,

(02:37):
but if you need it in one tothree years, here's my investment
advice right now. Don't riskit. As an example, my mother in law,
she suffers with dementia andher money was all invested in the
market. And my wife and I satdown about, I don't know, about eight
months ago and we said,listen, mom's not getting any better.
She may need this money rightnow. She's in skilled nursing care

(02:58):
and she needs that money rightaway. So we got in touch with the
investment advisor, said,listen, we're going to take things
out of the market because weneed to have more of a short term
focus on these things. So whatdo we do? We move those things from
those speculative investments.And of course the money manager is
like, wait a minute, Ralph,you're going to be giving away such
big rewards as we talked aboutyesterday, high risk, high rewards,

(03:19):
low risk, low rewards. But thetime investment horizon is short.
She needs that money rightnow. So if you find yourself needing
those short term things, thatemergency fund, maybe you're buying
a car in six months, maybeyou're buying a house in a year.
If you find yourself in thatone to three year time horizon, this
is the time to keep that in ahigh yield savings account, maybe

(03:43):
a money market account. CDsare great for this. You can buy and
ladder CDs at 3 months, 6months, 9 months, a year, whatever
that works for you. Or ofcourse there's the traditional money
market accounts. The goal withshort term investments is stability,
not growth. Of course there'sa risk reward for that. If you invest
the money in short term,there's going to be a lower reward.

(04:04):
But it's not about growth andit's about stability. Let's focus
a little bit on long termgoals. Those long term goals can
handle growth. That's fine.That's the money that you can afford
to risk in the market. So ifyou've got a goal of 10, 20, maybe
even 30 years away. Listen, Ijust turned 53 a couple of days ago.
I remember when my investmenthorizon was when I retired in 30

(04:25):
or 40 years, it's getting alot shorter for me. But when you're
at the beginning of that, whenyou've got that time Horizon in that
10, 20 or 30 years, you canafford to take more risk. Why? Because
you've got time to recover. Asmany people preach about in the market,
you got to take that long termview. So many people get stuck in
that looking at that statementevery month. Oh, my investments are

(04:48):
floundering. Ralph, don'tworry so much. We talked yesterday
about risk and rewards. I'mhoping you can tolerate those things.
I hope you've made thedecisions that's balanced for you.
But realize if this is longterm money, don't worry about it.
You've got time for the marketto recover. This is a great place
for stocks and index funds andThose individual retirement accounts,

(05:08):
401ks, 403bs, all of thosethings that make sense here because
time will smooth out the bumpsand those rises and falls in the
market because you don't needthat money next week. If the market
takes a downturn, you can kindof sit on the sideline and wait for
that. And here's the problem.So many people that I've worked with
mix the two and create thesemassive problems. If you don't understand

(05:30):
short term and long termmoney, if you confuse those two things
and it becomes dangerous. Acouple of days ago I talked about
being in the market feels likeyou're gambling. When you mix these
two things, you are mostdefinitely gambling. And that's how
people end up with sellinginvestments too soon. Like that couple
I talked about, they didn'tunderstand that they needed that
money for their emergency fundright away. So when the market took

(05:53):
a hit and they needed thatmoney, they had to sell the investments
too soon and they lost a tonof money. Also, if you've got things
that you don't need rightaway, you got those things that really
could be long term and you'vegot them parked. In short term things,
you're missing growthopportunities. It works both ways.
And you got to understand thetwo. The thing is, with these short
term decisions, you could loseyour money when you actually need

(06:17):
it. So you got to learn tokeep those buckets separate. If you
don't hear anything else I saytoday, understand the difference
between short term and longterm and keep those buckets separate.
Let's get into the Bible alittle bit. The book of Proverbs,
chapter 24:27 puts it thisway. Put your outdoor work in order
and get your fields ready.After that, build your house. Now

(06:40):
you might say, Ralph, that hasnothing to do with what we're talking
about, but it does. God callsus to plan in order. He calls us
to prepare for today and thenwisely build for tomorrow. Well,
investments work the same way.If you've got to prepare for tomorrow.
Those are your short terminvestments. When you're preparing
for later, that's your stuffyou're building and you're planning

(07:01):
for tomorrow. So this tiesright into scripture. As you know,
I always bring that to youbecause I want to tie the advice
that I give you directly intothe biblical principles of stewardship.
And this one just nails it. Sohere's a practical system. I want
to give you some practicalitytoday. Here's what I encourage you
to do. First thing you've gotto do, write down your goals. What
are those goals? Maybe you'vegot to buy that car. Maybe you're

(07:24):
going to be putting money awayfrom for a down payment for a home.
Maybe you've got a kidstarting college. Write down all
of those financial goals andthen right next to each one, assign
a timeline to that. Is thatshort term? Really put in the months,
years, whatever those thingsare and assign a timeline to that.
And then once you do that,then match that investment to that

(07:46):
time horizon. Now listen, thisisn't one of those things that you
just set and forget. This issomething you should be examining
every three, six, nine, ormaybe even once a year. 6. Sit down
with yourself. If you've got afinancial advisor, sit down with
them and go through that goallist. Because maybe some goals have
changed, maybe you've addedsome, maybe some things that need
to flex a little bit. But besimple, be practical and live in

(08:09):
peace with this. How about wepray together? Heavenly Father, thank
You for teaching us to planwisely. We saw that in scripture
and help us to do that. Helpus to see the difference between
what we need today and whatwe're building for tomorrow. Give
us patience to prepare for thelong term and the wisdom to keep
short term needs safe. Aboveall, remind us that our future is

(08:30):
secure in You, not in themarket, not in what's in our bank
account, and not in the thingsthat we have. And we ask this in
complete confidence. In Jesusname we pray, Amen. Now you notice
I've been starting to show thequestions. I've been getting a ton
of questions and I want toencourage you right now, send your
questions to me. The easiestway to do that is if you go to the
website justaskraft.com,you'll have a place there to put

(08:52):
your name and your questionbecause I'd love to feature it on
today's show because I want toanswer the questions that are getting
to you, the things that youreally want to understand about now
as we're talking about that.Tomorrow we're going to go and simplify
things even further. TomorrowI'm going to talk about stocks. I'm
going to demystify stocks. I'mgoing to tell you what they are and
how they work. It is going tobe a great show. I'm going to talk

(09:13):
about it in plain English. Somany people have complimented me.
They said, Ralph, you'llexplain things in terms that I can
understand. No Wall streetjargon tomorrow, just simple terms.
What is a stock and. And howdo I invest in those things. So make
sure you join me on tomorrow'sshow. And if you've struggled to
match your goals with yourmoney, let me help you take that
next step. I just finishedwriting my third book. It's called

(09:34):
How to Become a FinanciallyConfident Christian. And I would
love to give you a copy thatyou can download absolutely free.
It'll be a great place tostart your journey into actually
becoming a financiallyconfident Christian. And it's yours
absolutely free. Just go tothis website, financiallyconfidentchristian.com/becoming
it's packed with encouragementto help you invest with clarity and

(09:55):
peace. And listen, it takesover 30 years of the stories, the
people that I've worked withand really lays it out there in black
and white. So again, go getthat book. It's absolutely free.
No strings attached.financiallyconfidentchristian.com/becoming and
I really hope you do that now.Today, I want you to go out there
and live like a financiallyconfident Christian. I have confidence

(10:16):
in you. More importantly thanme having confidence in you, God
has confidence in you and hewants you to be successful in in
your financial life. So stayfinancially savvy out there. God
bless you. And you have agreat day today.