Where Do I Put Long Term Money?

As President and founder of Lord and Richards, I'm excited to share another strategy we use for your financial independence in retirement. Today’s topic, where to invest your mid- and long-term money, is critical for your financial planning.

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Once you have established an emergency fund somewhere like a short-term fund in a bank, short-term CDs, savings account, or money market, you need to consider the next pool-- your mid-term funds. This crucial piece is part of our retirement planning at Lord and Richards.

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We meet with people like you every day who have their IRAs and brokerage accounts in cash. They have often experienced considerable devastation and weren't prepared. We have a saying at Lord and Richards, “Failing to plan is planning to fail.”? You can plan for market downturns that are likely to come and position your wealth to avoid that devastation.

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That planning starts with having a pool of money you don’t need for living expenses when you retire. The emphasis of this reserve is growth, so we refer to it as a growing reserve.

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You have the reserve you want, but it’s not limited to cash, earning a couple of interest points. You want to realize good growth on this money. Unfortunately, many put all their retirement money into traditional tools like stocks, bonds, mutual funds, and ETFs.? During major downturns, they can experience devastating losses that cause setbacks and delay retirement plans. Although a growing reserve can't be 100% safe, you can still manage the risk. We do that through institutional risk management.

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Having money that isn’t necessary for living expenses during retirement gives you financial independence. That reserve isn't just sitting in a bank, it’s growing. We sit down with our clients to help them determine how much that is, and how much they’ll need to set aside and build for their retirement income beyond Social Security, pensions, and other sources.

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We accomplish this at Lord and Richards through institutional risk management. We put our funds into the hands of risk managers, who help large institutions, endowments, foundations, ?pension funds, and large corporations like Amazon. Institutional risk managers plan so that reserve funds can potentially earn more than at a bank while seeking to avoid the extreme volatility of past years like 2022, 2020, 2008, and 2000.

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Those periods were devastating for anyone saving for retirement. You need to set aside a reserve that isn't necessary for funding your retirement but is available to finance life events, like purchasing a second home, going on vacation, spending time with kids and grandkids, or even providing for healthcare crises and emergencies that insurance doesn't cover.

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The whole purpose of your reserve is growth and liquidity and to provide when your bank account doesn't. You will have to accept some level of risk, but we can utilize the tools we have at Lord and Richards to manage that risk just like large institutions do.

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This is no small undertaking, and we employ people who will help you and support your portfolio. We refer to them as the “chickens” that “sit on your eggs” and they do some amazing work. Through the leverage we have in our relationships, we have access to people who normally would be available only to billionaires or to large institutions.

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One of the ways they can help is through hedging. You may think hedge funds are dangerous, but there is a kind of hedging that’s not dangerous. You take some money from your upside and put it on the bottom side to provide a cushion, something under your feet so your portfolio won't collapse during market downturns. There's still risk, but it's managed risk.

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If you own a business, you know you must manage risk within your company. You take risks, but they're calculated and thought through. That's what we're doing with this pool of money. We set some aside to protect your income for your future, money that will never see market declines.

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There are three things you can emphasize: safety, growth, and liquidity. If you're willing to be a little less liquid with your money, we can help you see some incredible results. You can have safety and growth at the same time.

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In this pool is your protected income. We want to develop a strategy here so that your money is safe and growing while providing an income that will sustain you through your retirement. This strategy will be the topic in future segments.

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We help our clients with this kind of critical financial planning every day, and we could be helping you right now. Developing a plan to achieve financial independence begins with a complimentary conversation with us, where you share your goals, dreams, and values. Give us a call to get things going.