Near the end of the classic movie “Meatballs”, Bill Murray inspires his group by telling them not to worry about the score, and ends with a chant of “It just doesn’t matter.” Yes, I know I skipped over a few jokes in between. This scene came to mind as I was putting recent market moves in context for a client. Too often we humans allow ourselves to get caught up in an event without asking how important it really is to us. Watching our investment values go down can be stressful. The closer we get to retirement, the more stressful it can be.
As the apprehension builds, most of us would be well served to channel Bill Murray.
One of the greatest misunderstandings regarding investing is that of returns. Returns are reported based on some arbitrary time period. The nightly news reports the daily move from the market
Arbitrary time period returns just don’t matter. There are times when markets going down have a real impact on us. For example, if you need to sell because you’re ready to buy a house, experiencing a 15% drop in your portfolio at that time does matter (ignoring the question of why you would have the money for house purchase invested in something that could go down 15%). It is for this reason we routinely discuss with clients their upcoming cash needs. Generally speaking, as you approach a due date for an expense, you want to reduce the risk of that money getting wiped out.
A great majority of the time what does matter
I am not arguing you should never look at your investments. Instead of looking at the percent return
Kevin focuses on helping people with retirement income planning. He is concerned that too many people become overwhelmed as they shift from building their retirement savings to using their retirement savings to support their desired lifestyle. By engaging in a robust planning process, he aims to lessen the financial fears we all have after we end our careers. Learn more about Kevin