Retirement is a time when many investors shift their focus from accumulating wealth to preserving and generating income from their existing assets. As an investor nearing retirement, there are several key considerations to keep in mind to ensure a successful transition into retirement. Here are the five most important things an investor within five years...
Author: Dave Conley
I am a Certified Financial Planner™ who has helped our investment clients in their pursuit of financial peace. My 25+ years of financial planning EXPERIENCE has allowed me to help our clients as they pursue financial peace. My definition of financial peace is "having the resources (time, health & money) to do the things you enjoy with the people that you love." What's you plan for financial peace?
Just for a minute, imagine what it might feel like to be satisfied with simply having “Enough.” How might that change your priorities? Your daily schedule? It’s important you actually sit down and think about it because only you can define “Enough.” What might happen if you were to make this shift? Would you work less? Would you spend less? Would you sleep more? Would you quit your job and start something new? Would you give more to charity? Maybe nothing new would happen. But what I can tell you is this: If you can’t find a way to be satisfied with enough, you may never be satisfied with anything.
Predicting the direction of the market is like predicting when you will hit the bulls-eye in a dart game. The majority of the time throughout market history, the markets have been rising. History shows that the chance of your money growing in a diversified portfolio of stocks and bonds is much like the odds of your next dart hitting any number on the dartboard... except the bulls-eye. If you are going to try and time the market by moving your money in and out, you have to ask yourself how confident are you that you can hit the bullseye when you do.
In simple terms, speculators are trying to out-smart the markets while investors simply participate in the markets. The investment time horizon is also a very important factor as speculation tends to be over the short-term while investing is over the long-term.
The S&P 500 or the Dow Jones Industrial Average are not reality. Reality is not price-to-earnings ratios and technical market studies. Symbols on the computer screen are not the real world. In the real world, companies create wealth. Stock certificates don’t. Stock certificates are simply proxies for reality.
The general economic model of a recession is that when unemployment rises, consumers are more likely to save than spend. This places pressure on businesses that rely on consumers’ income being spent. As a result, company earnings and stock prices decline, which can fuel a negative cycle of economic decline and negative expectations of returns.
It is incredibly difficult for anyone to consistently beat the market and avoid behavioral mistakes. There is no magical set of rules, a formula, or an “Easy Button” that can generate market-beating results. It doesn’t exist and never will. Beware of “gurus” selling a hands-off, rules-based system to investing. If such a system existed, the owner wouldn’t have a need to sell books or subscriptions. Mark Twain said it best when he said "It’s easier to fool people than to convince them that they have been fooled".
How much money is enough? For John D. Rockefeller the answer was “just a little bit more.” At the pinnacle of his success, Rockefeller had a net worth of about 1% of the entire US economy (about 1/3 of a trillion dollars). He owned 90% of all the oil & gas industry of his time....
The hamster wheel literally describes the concept of lots of activity but making no progress. In times of crisis, either real or imagined we are encouraged to do something. If your house is on fire or if you witness a car accident you must do something and quick. Why is it that doing nothing when it comes to our investments is so difficult. When clients ask "what are you doing..." sometimes the better question is "is there anything that needs to be done" related to our investments? Are you OK with doing nothing when nothing needed to be done?