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Inevitably, long road trips are accompanied by a few bumps in the road. Few families have departed Indiana and headed for a spring break in Florida without experiencing road construction in Kentucky or unimaginable traffic in Atlanta.
But despite the moments you’re parked in traffic or creeping along, you keep moving in the direction of your destination. Expectations are always heightened the first time you make a journey. While you can look at a destination on a website and see the path toward it on a map, until you see the beaches, the ocean or even Disney World, it can be hard to fully understand. Retirement planning is no different. But unlike planning a vacation, you only get one chance at mapping your retirement.
You are on a financial journey regardless of how much you are saving or what vehicles you use to accumulate your nest egg. Others can share stories about retirement but you have never been there yourself. Older and wiser family members advise you to save early and often but there are times when life intervenes. Kids are expensive and an unexpected expense is usually lurking around the corner. It takes dedication to delay today’s gratification in the pursuit of tomorrow’s retirement savings goal.
The headaches that accompany unexpected events along any road cause us stress and frustration. But when you know where you are headed and are committed to reaching your destination, you stay on the path. Such resolve is critical during those times when it seems like you are making no progress, whether on the highway or in your investment strategy. If the speed limit sign says 70 mph, why are you plodding along at 15? If the average return is close to 9%, why isn’t your account growing faster? Both are reasonable questions and believe me I have been there!
Over the last 15 months the S&P500 has gone virtually nowhere. The value on Monday was very close to 2030—the same S&P 500 value recorded in November 2014, and multiple times throughout 2015. Today’s markets feel like they are stuck in traffic. Even the most congested traffic jam ultimately breaks free and I am often surprised by the cause. Sometimes an accident backed up traffic, while other times the delay was caused by an officer giving a word of warning to a driver. Sometimes there seems to be no apparent cause. In the markets we can never know for certain the individual or multiple causes of slow growth. Indeed, we can speculate just as many for why the market should be rising as falling!
When it comes to retirement planning or any other part of life, the best advice is to focus on what you can control. First and foremost, understand where you are going and why. Second, make sure you have determined the best route to reach your destination. Finally, stick to the game plan. Wandering aimlessly will get you lost in a car and make you broke in a market.
Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column offset=”vc_hidden-lg vc_hidden-md vc_hidden-sm”][vc_widget_sidebar sidebar_id=”sidebar-main”][/vc_column][/vc_row]