Looking Ahead: Finance for the Future
2020 has society collectively looking over its shoulder; we’re all waiting for the next shoe to drop. Setbacks and shutdowns have people all over the world weary of spending and saving. Where do you allocate your investments in volatile times? Is it responsible to be invested right now? How deeply should I be invested; where should I be invested?
For an educated take on my investment inquiries, I turned to Roya A. Moltaji, a financial planner and owner of Roya Relational Financial Planning (and friend of Lavender) for prudent pecuniary advice:
This year was full of curveballs, what has that done for financial planning? Are people changing investment strategies to match the dynamic nature of life in 2020?
Luckily, the act of financial planning is designed to handle curveballs. In the process of planning, we create a roadmap for goal achievement. Of course, we all like to believe that life will go exactly as planned, but in reality, life is fluid and we’ll all experience changes. The environment around us is constantly changing and we need to be able to adapt. Our own desires and goals also change and what we think we want for ourselves in our twenties may change in our thirties, forties, fifties, and beyond. Part of the financial planning process is to create various scenarios to help people quantify the financial impact of decisions or circumstances they may be facing. Also, we develop a variety of investment scenarios to help determine the most appropriate path for our clients based on their stated goals and tolerance for risk.
During the market downturn in March, there were three distinct reactions when I reached out to my clients to discuss their accounts. Many people close to retirement were not phased at all. They often responded by affirming they’ve been through many ups and downs in the market and they know we have a strategy in place to get them to—and through retirement. Young investors who hadn’t been invested in the 2008-2009 market downturn were often frightened and felt they needed to flee to safety. Young investors who had the experience of being invested during 2008-2009 by and large were considering adding as much money to their investment accounts as they could.
What do you see happening in financial planning in 2021?
I believe the desire for professional advice is increasing, and 2021 will be no exception. There is a lot of information and a lot of hardship out there. There’s a widely held belief that financial literacy is fairly low in this country, which also means many people don’t feel confident in their decision-making capabilities when it comes to money. During challenging times, people desire security, calm, and confidence.
What should I (or anyone) definitely avoid right now? What moves are reckless in times like these?
Avoid acting out of emotion with your money. It’s reckless to “jump on a bandwagon” or to act out of short-term greed or fear. In fact, I’d recommend against acting out of greed or fear at any time, and I encourage making a plan so you know when you’re off track. Knowing where you are according to where you thought you’d be can help you determine how to course correct in a thoughtful and strategic way.
Let’s say someone gets a bonus from their job, or they get a gift of $1,000. What’s the smartest way to start investing or saving with a relatively modest initial investment?
The first thing to consider is that everyone is different and has a different tolerance for risk and time horizon. Assuming this individual has a higher tolerance for risk, there are several online brokerage firms where you can open up an account, do some stock, mutual fund, or ETF research, and start investing. There are also some investment apps where you can do the same thing. Be sure to understand the cost structure of the platform you’re using and how to access information as well as your money. When I invested for the very first time at age 18, I decided to choose a company that I knew and it was a retail store that I shopped at consistently. Of course I didn’t know as much then about investing as I do now, but I looked at the performance chart and tried to do a bit of research to justify my “hunch” to invest in the company and I made the stock buy with the full understanding that I could lose my investment. From there, I continued to put small amounts of money into my online trading account in different companies I knew and liked, and that’s how my understanding of investment began before studying finance in college—and eventually beginning my financial planning career.
What is Relational Financial Planning?
When my wife [deemed] me a relational financial planner, I looked up the term and found it wasn’t defined on the internet. I thought the internet knew everything! I could talk about this subject for a while, but in brief, Relational Financial Planning means that relationship and experience are prioritized as much as transactions and outcomes. To make the most mathematically sound decision with one’s money isn’t necessarily at the center of the goal. But to build a better relationship with money, with family, with intimate and/or business partners, matters as much as the financial outcome of an action. In fact, the emotional impact means as much as the financial impact.
How can people find you if they’d like to get a jump on financial planning?
[Hopefully] I’m easily found!
100 S. 5th St., #2300
Minneapolis, MN 55402
**Roya Moltaji is a registered representative of and offers securities and investment advisory services through MML Investors Services, LLC. Member SIPC. www.SIPC.org
ROYA llc is not a subsidiary or affiliate of MML Investors Services, LLC, or its affiliated companies. 100 S 5th St Suite 2300, Minneapolis, MN 55402 (612) 333-1413
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