On my way to a friends house this past weekend, I had chosen at my wife’s discretion to take the back road. The back road being a 25 mile windy road through a short valley, with twists and turns that was going to get us to our destination in half the time. It’s a road where it feels like the road is never going to end. In fact we were about 10 miles in before I glanced at the GPS to see how far along we were. To my surprise we still had 20 more miles. I just kept driving and hoping the windy road would end.
It did, and once my stomach settled back down, it was all good and I felt secure being back on solid, straight highway.
This is exactly how investing can be. If you have or haven’t invested, you learn there are lots of windy roads when you invest. Most people aren’t sure what’s around the bend, and what the ups and downs entail. We look at the GPS that tells us to stay the course, which brings comfort, but do you have a financial GPS?
If you did, it would probably tell you don’t let the twists and turns unsettle you from your end goal. If you are investing, yes, year to date, as of 9/28/15 the S&P is down 8.6% (yahoo finance). (That’s an index with 500 of the biggest US companies.) Warren Buffett says “be greedy when others are fearful, and fearful when others are greedy.” With economies around the world struggling to rebuild their nations, the US still appears to be in pole position for growth. What’s the unemployment rate? Have you gotten a raise this year? How many of your neighbors have been foreclosed on? Although tiny indicators we can all tell the U.S. economy is not melting down.
I can hear it now the chorus of readers saying “with all these ups and downs, that’s the reason why I don’t invest in the stock market. Have you seen this chart? That’s the S&P 500 over the last 10 years, including one of the biggest financial crises in the U.S.’s history, yet where is the S&P since then? Would you argue it’s a bad idea to invest in that time-frame? Obviously the past doesn’t indicate what the future will look like, but when it’s all we have …
As I was driving the windy road I couldn’t help but be mindful of the other cars flying by on the opposite side, worried that they might inch into my lane just for a second and then it would be all over. Even while doing that if I lost focus I could have crashed my own car. I had to keep reminding myself to stay focused on what I can control.
Staying focused means investing and staying invested to reach your financial goals. Investing is one of the tools to help get us to retirement. There are a lot of twists and turns along the way but in the end investing can help provide financial security you just need a GPS.
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All indices are unmanaged and investors cannot actually invest directly into an index. Unlike investments, indices do not incur management fees, charges, or expenses. Past performance does not guarantee future results.