Time Is Your Biggest Asset (If You Use It)

I think it was Warren Buffett who said something along the lines of:

 

"If you can't figure out what to do with your money while you're making it, you're going to have the same problem when you're not."

That quote stuck with me. And I’ve watched it play out over and over again throughout my career.

 

The Target Date Fund Problem

I see it most often with target date retirement funds.

 

These funds are designed for people getting close to retirement. They automatically shift from aggressive to conservative as you approach your target retirement year.

 

That makes sense if you're 55 or 60.

It doesn’t make sense if you're 25 or 30.

 

But younger people pick them anyway—not because they researched their options or ran the numbers, but because they don’t know what else to do. So they default to something that sounds safe, something with a date that matches when they think they might retire.

 

And in doing so, they miss years of growth they can’t get back.

 

Time Is Your Real Advantage

The biggest thing you have on your side when you’re young isn’t knowledge. It’s time.

 

But time only works if you use it.

 

A 25-year-old in a conservative allocation is giving up one of the most powerful tools they have: decades of compounding growth.

 

Sitting in the wrong allocation because you don’t have clarity costs more than most people realize.

The market will go up and down—that’s normal. But when you're young, those downs don’t hurt you the same way they hurt someone retiring next year. You have time to recover, time to ride it out, and time to let growth work in your favor.

 

Most people don’t think about it that way. They see “retirement fund” and assume it’s all the same.

It’s not.

 

Strategy Should Match Timeline

The goal isn’t to get aggressive just for the sake of it. It’s to match your strategy to your timeline. And that requires understanding what you actually have—not just picking something because it has a year on it.

 

When someone comes to me at 28 and tells me they’re in a 2055 target date fund, my first question is simple:

“Do you understand what that fund is actually doing with your money?”

 

Most of the time, the answer is no. And that’s the gap—not a lack of money, not a lack of options, but a lack of clarity.

 

What You Can Do About It

If you're young and saving for retirement, here’s what matters:

  • Understand your allocation.   What percentage is stocks? What percentage is bonds? Does that match your timeline?
  • Don’t default to “safe.”   Safe isn’t always safe. Sometimes it’s just expensive.
  • Use time while you have it.   A conservative allocation at 30 can cost you growth you’ll never recover.
  • Ask for help.   There’s no shame in not knowing—only in staying confused because you didn’t ask.

Money doesn’t fix confusion.

Clarity does.

 

And clarity comes from understanding what you have, why you have it, and whether it matches where you’re going.

 

That’s where real planning starts.

 

Need help finding clarity in your own plan? That’s what we’re here for at Life Planning Advisors, LLC.

Demystifying Economic Jargon

Economic news often comes with a slew of complex terms that can feel overwhelming. Understanding key economic indicators can help you make more informed decisions about your financial future. Here's a breakdown of five essential economic terms that frequently appear in market updates and policy discussions.

Producer Price Index (PPI)

The Producer Price Index (PPI) tracks the changes in selling prices received by domestic producers for their output. As a leading indicator of inflation, rising PPI values can signal forthcoming increases in consumer prices since higher production costs eventually lead to higher retail prices.

Consumer Confidence Index (CCI)

Published monthly by The Conference Board, the Consumer Confidence Index (CCI) gauges the overall optimism of consumers regarding the economy and their personal financial situations. A high CCI generally leads to increased spending and economic growth, as confident consumers are more willing to make purchases and investments.

10-Year Treasury Yield

The 10-Year Treasury Yield is a significant benchmark for interest rates across the economy. Rising yields can indicate expectations of inflation or economic growth, while falling yields may signal economic uncertainty or slower growth. Investors closely watch Treasury yields as they provide insights into the economic outlook and market conditions.

Consumer Price Index (CPI)

The Consumer Price Index (CPI) is a measure that examines the average changes over time in the prices paid by urban consumers for goods and services. As the primary measure of inflation, shifts in the CPI affect purchasing power. A rising CPI reflects increased inflation, which can erode the value of money, impacting how much you can buy.

Consumer Sentiment Index

Compiled by the University of Michigan, the Consumer Sentiment Index measures consumer attitudes toward personal finances, business conditions, and spending plans. Similar in purpose to the CCI, it provides additional insights into consumer psychology. While both indexes serve to gauge consumer confidence, they derive from different methodologies and samples. With an understanding of these terms, you are better equipped to interpret market fluctuations and align your financial strategies accordingly. Keep this guide handy for when economic terms cloud your thoughts, and consider sharing it with those who might also benefit from clearer economic insight.