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Shape Your Pathway to a Secure Retirement

Presented: June 20, 2022


As summer begins and schedules open up, you may have more time to consider whether your investments and current investment strategy are working for you. Discover the key components you should keep in mind that can help ensure your future is on solid ground.


Hello, and welcome to my webinar on Heating up Your Investment Strategy; The 3 W’s of Investing.

If you didn’t know, June 20th marks the Summer Solstice. This means a few things for you; it’s the longest day of the year, it’s the official start of summer, and it is a great time to take a look at your investment strategy to see if there are any ways to improve it.

A quick background on the company: This webinar series is brought to you by AAFMAA Wealth Management & Trust. Our mission is to be the premier provider of financial planning, investment management, and trust services to the American Armed Forces Community.

Our parent company, AAFMAA, has proudly served America's Armed Forces since 1879. AAFMAA is a non-profit, tax-exempt (501[c] (23)), member-owned mutual aid association offering life insurance to all branches of the U.S. Armed Forces and their families. (Children age 23 and under). AAFMAA Wealth Management & Trust is a fully owned subsidiary of AAFMAA.

Also, a few disclaimers: This presentation is educational. It is for general information only and is not specific investment, legal, or tax advice for any of you individually. Do not rely on this presentation alone to guide your investment management decisions. Since each situation is unique, your needs for financial services will differ. For individual advice, please contact us directly. We produce this webinar series in-house with our professional staff as a service to our members to help them better understand the resources that are available to them. We have highlighted here two distinct characteristics that separate AAFMAA Wealth Management & Trust from other service providers: [1] Our fiduciary standard, which requires us to always act in our clients’ best interests, and [2] we exclusively serve the U.S. Armed Forces Community. My name is Garrett Sorensen, a Relationship Manager with AAFMAA Wealth Management & Trust, and I'll be walking us through today's discussion. Thanks for joining us, let's get started.

So, what are the 3 W’s of investing? They are the “Where, Why, and When” of investing. Specifically, where you should invest, what to consider when investing, and when you should invest.

Let’s jump right into it with the “Where to invest.” Now, this isn’t about which stocks to pick or funds you should hold. The "Where" of investing deals with choosing the right investment vehicle to help fuel your gains. With that, I present "The order of operations for tax-advantaged investing." Each of these investment vehicles has an advantage to them that, if possible, should be used. Preferably in this order.

The first place to look is your employer's retirement savings plan. Whether it's a 401k, a 403b, or any other defined contribution plan, this is a great place to start investing. Not only does it make sense because you can have your contribution come directly from your paycheck, so there is no temptation to spend it, but your employer might even offer you a match if you make contributions. This is like free money for doing something we should be doing already, which is saving for retirement. Now, if your employer does offer a match, contribute the full amount of that match and carefully consider how much to contribute beyond that amount. Contributing to a defined contribution plan is a great vehicle, but you want to think about other vehicles that have tax advantages down the road.

This leads us to investing in a Roth IRA. Now, I do want to start by saying Roth IRAs have income and investment limits, so not everyone qualifies for this investment vehicle. But, if you qualify for a Roth IRA, you get access to one of the better growth investment opportunities. Roth investments are after-tax contributions you can withdraw in retirement completely tax-free. The tax benefit on these types of accounts allows for amazing growth due to their tax-advantaged nature. Again, there are limitations to these types of investments. For 2020, the contribution limit is $6,000 for people under the age of 50 and $7,000 for people over the age of 50. I would consider trying to max a Roth IRA each year if possible.

Now, a Health Savings Account is a relatively new investment vehicle and not available to everyone. Still, if you have access to it, you can get a triple tax benefit if used correctly. First, an HSA is a savings account designed to allow people to save for medical expenses each year. They are available to people who have a high deductible health plan and are a tax-advantaged way for those with medical expenses to save and pay their medical bills. There are annual contribution limits you have to consider, but contributions are made on a tax-deferred basis, grow tax-free, and can be withdrawn tax-free if used for qualifying medical expenses. If you hold the funds until age 65, then you can withdraw the funds for any purpose, but it is taxable if it's not a medical expense. This is a savings fund that everyone could realistically benefit from as we all experience some type of medical expense in our lifetime. If you don't, these funds can act like a tax-deferred savings account in retirement.

Now, if you've hit the limits on your Roth IRA and HSA accounts, and you're already getting the match on your employer-sponsored plan, how do you save even more? Now is the time to revisit the contribution amount to your employer plan. There are a lot of different types of plans with different contribution limit options, so I would suggest sitting down with your HR rep or plan sponsor and have them go over the limits for your specific plan, but this is a great place to start tucking even more money away for your retirement.

Once you've hit the match on your 401k, started maxing your Roth IRA Contribution, are saving to an HSA if available, and even raised your contributions to your 401k more, next consider saving toward regular taxable investment or a joint account.

Now here's the thing, some of you might be looking at this and saying, "but I'm self-employed" or "I want to save for a home one day," "I want to start my own business in the future." "I want to leave an inheritance for my grandkids, so is this still the best way to do that?" The answer to that question moves us into our next W.

Why you are investing is probably the most important conversation to have with yourself, your spouse, your family, or anyone that has a stake in your financial future. Start with your goals. What goal are you investing for? Is it retirement? The first home for you or a child? Perhaps you are saving for college, a wedding, to start a business or a non-profit, or even just to be able to donate more to charity. Your investing strategy should have a goal in mind, and it might even have several you're hoping to accomplish. Think about how you want to use your savings. How long do you have until you get there? What do you want it to look like when you get there, and how long will it last?

If you're like most, saving for retirement is on top of the list. However, we can and often have different goals as well. I want to be able to save for retirement and pay for my son's college. This means I have to make changes to a traditional savings plan to reach these goals simultaneously. This is where it can help to have a professional to sit down and discuss these things with. A good financial planner can help you identify all the different goals and help build a roadmap for you to accomplish these goals.

Another thing to consider is your risk tolerance. This is probably the biggest defining factor in decisions with your investments. Your risk tolerance should take into account how much time you have to accomplish your goals. How you feel when you see your accounts going up or going down. Are you a person always out seeking the highest gains, or do you prefer to try and minimize your losses? These are all questions you need to consider when it comes to making the decisions for our investments.

These last two quarters have been perfect times to think about how you felt when it comes to investing. When you heard the market was down, did you think, "oh no, how much money did I lose?" or did you say, "now would be a great time to invest even more!" You rarely make the right decision when you're going through as difficult a time as we did a few months ago. So, knowing how well you can handle volatility in your investments before it happens will help ensure you don't make any bad decisions when the worst happens.

Our last W is “when” you should invest. To answer this, I want to make a bit of a comparison. You only have two options when it comes to timing investments. They are market timing (trying to buy stocks when they're low and selling them when they go up) or Dollar Cost Averaging.

The pros to market timing are clear, there is a higher POTENTIAL for gains, and psychologically, it’s easier. When you think you're buying a winner, it's easy to put cash on the table. The downside to this is that there is a much higher potential for loss as well. Plus, it's impossible to know when a stock has hit bottom or top. So, it's just guessing, unless you have a crystal ball, of course.

Dollar-Cost-Averaging is when you place money into the market periodically over a certain time frame. It might be a few weeks, months, or like most people do when saving for retirement, it's over years. The benefit of this strategy is that you lower the chances of large losses. Not to say you won't see losses, but when you don't focus as much on timing, you spread losses out over different basis points, minimizing the actual percentage loss amount. Also, DCA has statistically higher returns than market timing. Now, the downside to this is you have to have a savings mentality. Meaning, this strategy takes some discipline. If you're the type that looks at your investment accounts every day and daydreams about what you could do with that money, this strategy might be a bit challenging. Also, it's just not "exciting." If you ever want to be the life of the party, talking about how you minimize your exposure to market risk by buying across different price ranges is not the way to go. So, again, unless you have a crystal ball, create a plan where you automatically save at specific points. No matter what the markets are doing, it is going to be the winning strategy.

For the second part of when you should invest, I want to tell you a story. This is the story of David and Bruce. David and Bruce are both the same age, and both want to save for retirement at the age of 65. They plan on doing that by saving $2,000 a year. The difference is, David is going to start when he is 19 and stop saving when he is 26. Bruce won’t start saving until he is 27 and will invest until he turns 65. Now, both David and Bruce stick to their plans and never touch their investments. Assuming they both saw a 10% rate of return, how do you think they did? Who do you think is going to have more money for retirement?

So, here’s the results; David ended up investing a total of $16,000 while Bruce invested a total of $78,000. But David ended up with a balance of just over one million dollars while Bruce is just shy of 900k. How does David invest 62,000 less than Bruce but end up with an account 151,000 higher, you might ask? The power of compounding takes time. So, the moral of the story of when you should invest is, the sooner, the better!

All right, so let’s recap a little of what we just went over. For the "Where," having a little bit of knowledge of your investment options can have a huge impact on your financial future. Consider your goals and make sure your investments align with those goals. As for when to invest, unless you have a crystal ball, don't worry about how the market moves, just be in it and you will win. And of course, the sooner the better, but if you didn't start as early as you would have liked, it doesn't mean you still can't reach your goals. Last but not least, having some help organizing a plan can definitely help you reach your goals.

So, here is what you need to do. First, take some time to figure out what is going on for your specific situation. Get your employer-sponsored retirement plan paperwork and start reading it. Ask HR questions about your retirement plan or even an HSA. Spend some time on Google asking questions. Having this information allows you to make the most informed decision for you. Next, figure out what your goals look like. And by that, I don't mean what your goals are. Take time to visualize what reaching your goals looks like. What does it look like in retirement? Are you fishing all day or starting a non-profit? When you pay for your kid's college, is it checked every semester, or is it a prepaid 529 agreement? Next, put your investments in "set it and forget it" mode. This way, you aren't tempted to spend before you save or try and time the markets. And of course, get the help of a professional when it makes sense.

How do you know when it is time to reach out to a professional? When you are having a hard time figuring out what the next step for your money is. Also, once the financial decisions you are making have larger impacts than what you want to make alone. For example, small percentage changes in 300,000 plus investment accounts can worry people. Bringing in a professional to help with those decisions ensures you’re making the right choices for your future.

Of course, I, or any of the Relationship Managers at AAFMAA Wealth Management & Trust would be happy to assist. You can reach me by calling the number you see on your screen, by email at, or by going to the AAFMAA website which is You can also find me on LinkedIn at I’m on Facebook at Garrett Sorensen AAFMAA Wealth Management & Trust LLC. It would mean a lot if you could stop by and give me a like on Facebook. And lastly, you can find me on Twitter @garrettsorensen

I want to thank everyone for attending my webinar, and I ask that you please keep in mind this presentation is educational. It is for general information only and is not specific investment, legal, or tax advice for any of you individually. Do not rely on this presentation alone to guide your investment management decisions. Since each situation is unique, your needs for financial services will differ. For individual advice, please contact us directly. We produce this webinar series in-house with our professional staff as a service to our members and to help them better understand the resources that are available to them. For individual advice, please contact us directly.

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