Since 2020 members of the Ruedi Wealth team have been writing weekly investing and retirement planning columns for our local newspaper, The News-Gazette.
Imagine the stock portion of your portfolio has declined by 30%. How do you feel? Now I want you to take this lifeboat drill a step further and imagine the stock portfolio is still down 20% or 30% a year later. How do you feel then? What about two years later?
Savers often get stuck choosing between investing their money or paying off debt. There are many things that must be considered when making this decision, both the objective mathematical considerations and also the human emotional side as well.
As retirement planners, we have to recognize the uncertainty of returns and make sure our clients’ financial goals are not derailed by something like a perfectly normal bear market. For this reason, we have to “stress test” any financial plan we build against a wide range of possible outcomes.
If you want to chip away at a monumental savings goal like funding a retirement, you can’t simply hope to save here and there when it is convenient. It won’t be done in a single year or lump sum. You will need to plan for years or decades of consistent saving before you notice any material progress towards such a big goal.
There are only a handful key factors that determine what type of an investment experience people have and whether or not they are successful as an investors.
Next time you are tempted to change your investment portfolio based on something you heard on the news or read in a financial journal, ask yourself the following question, "Am I the only one who knows this?" The answer is most likely no, and you probably should leave your portfolio as it is.