Long-term investment strategy
May 16, 2022
Starting early, staying patient, and setting your savings goals are the basic keys to success when investing, Craig Kempler ’95 told the combined economics and financial literacy classes at Culver Academies on May 11.
Kemper is a portfolio manager at Janus Henderson Investors and is responsible for co-managing the U.S. Small Cap Value strategy, which means he plots the strategy for approximately $4 billion in that value fund. He also served as a research analyst until October, 2018, covering U.S. technology, media, telecommunications, and building products.
He has over 20 years of experience in the financial industry. Based in Chicago, Kempler received his bachelors in economics and political science from Denison University and his MBA with a concentration in finance and accounting from the Indiana University Kelley School of Business.
Kempler walked students through the basics of compounding interest, and the risk/reward of asset allocations in investment strategies. He pointed out that your investment strategy will vary on what your goals are and timing.
The best part of any savings strategy is that “laziness pays off,” he said. Once it is set up, simply letting the money compound interest is best thing to do. For long-term investments, the goal is to beat the rate of inflation.
The key is to begin investing early, he said. That’s because the interest is compounding, so the earlier interest will be earning interest. An example is Jack starting a retirement account at 25 by investing $200 per month. Jill starts at 35. While Jack may have invested $24,000 more over the first 10 years, when they are ready to retire he will have $300,000 compared to Jill’s $150,000.
Your age also impacts the risks you are willing to take, he explained. If you start young, you can afford to invest in higher risk investments because you have a longer time to ride out the ups and downs of the market.
Deciding what to invest in is key. Kempler quoted financial adviser Peter Lynch, who said the best way to decide on a stock is "to buy what you use." But, instead of investing in mobile phone stock, invest in the companies that make the parts for your phone like chip or semiconductor manufacturers.
And remember, he added, “there is no crystal ball” when it comes to investing, especially in the stock market. The best thing is to invest in a mutual fund. “Don’t be intimidated,” he said. “Keep it simple and invest for the long term.”
Again, what you are saving for – a house, car, or retirement – will dictate how conservative your investment strategy becomes. If you are investing for the short-term, “make sure it’s safe,” Kempler said. And, if you are within three to five years of retirement, you will want to reduce your risk as well.
One thing he suggested the students could do right now is take $500 from their summer job and invest in a Roth IRA for retirement.
“You’ll be amazed how much you have after 40 years,” he said. “Again, laziness pays off.”