1.Begin by asking yourself, Why do I want to invest? Buy a home? Send a child to college? Be financially independent?

Next:

• Determine how much money you will need to reach your goal.

• Figure out how many years you have until you need the money.

• Determine the optimum mix of investments. (based on historical returns)*

  Here is an example:

  Monica, 49, wants to be financially independent by age 65. She wants to live on 75% of her current income of $104,000 which is $78,000. She learns that her social security benefit will be $51,600 a year so, Monica needs $26,400 more a year.

  How much will Monica need to save by age 65?

  Monica will need $771,894 by age 65 to supplement her social security. (click on number for calculation worksheet.)

  How much money will she need to invest annually to reach $771,894?

  Monica has 16 years until retirement and will need to save $25,454 a year with an annual rate of return of approximately 8%.

  How should she build her portfolio to achieve 8% rate of return? (there is no guarantee she will achieve 8% but we use historical returns to build her portfolio.)*

  Investing in a mix of 55% large cap stocks, 35% bonds, and 10% T-bills has historically returned 8.3%.*

2. Diversify your investments.

• Diversification is the practice of reducing your overall risk by spreading your money across different kinds of investments such as stocks, bonds, t-bills, real estate, precious metals, and investments overseas. The reason diversification works is because each type of investment will act a certain way during certain economic cycles. This means that your investments should not all decline or rise at the same time. The idea is to create less volatility in your portfolio.

• The chart at the top of this page represents twenty-three different investments. The best way to manage volatility of your portfolio is DIVERSIFICATION. Of course, you do not need to invest in all twenty-three investments above; there is such a thing as too much diversification that can end up costing you a lot in management fees.

3. Invest in Exchange Traded Funds (ETF's).

ETFs offer investors a way to pool their money in a fund that makes investments in stocks, bonds, or other assets. In this way, they are similar to mutual funds. I recommend building a portfolio using Index-Based ETFs- Why?

• You get broad exposure to the section of the market you want to be in.

• They are usually less expensive than mutual funds.

• There is no active buying or selling within the fund, which creates tax efficiency due to fewer capital gains or losses to report on your year-end taxes.

4. Know your tolerance toward volatility in the stock market.

Take a risk assessment questionnaire to determine your tolerance. Aggressive, Moderate, and Conservative are risk tolerance measures. Use your risk profile to understand your emotions and how you will react to market volatility. If you have a conservative risk tolerance, consider hiring an advisor to partner with you to help you emotionally handle the market's ups and downs. An advisor can keep you focused on your long-term goal and your WHY for investing.

5. Create an Investment Policy.

For each goal write down your timeline, your risk tolerance, and your optimum asset mix. Refer to this when your emotions about the stock market get overwhelming. It will remind you of your investment strategy for reaching your financial goal.

*Based on Historical Returns from 1928-2020; Stocks-10.1%, Bonds-5.02%, T-bills-3.6%

Marathon Wealth Management, LLC is an Investment Advisor registered with the State of Washington. All views, expressions, and opinions included in this communication are subject to change. This communication is not intended as an offer or solicitation to buy, hold or sell any financial instrument or investment advisory services. Any information provided has been obtained from sources considered reliable, but we do not guarantee the accuracy, or the completeness of, any description of securities, markets or developments mentioned. We may, from time to time, have a position in the securities mentioned and may execute transactions that may not be consistent with this communication's conclusions.