When would you want to know if you were heading on a road trip and something ahead created a challenge? Your answer likely depends upon the severity of the issue and the potential alternatives. What about significant issues at the moment that will be resolved by the time you arrive to that location? As an example, think about a multi-car pileup blocking the interstate. The damage is significant, and the road is shut down currently and will likely remain so for hours. If your travels take you to that point in short order, you would like to be informed as soon as possible. If the roadblock is 12 hours away, the speed of the notification isn’t as critical.
Similar comparisons exist in retirement planning. Typical logic spewed in the financial industry is that if you have more than four years before you retire, then-current market conditions don’t matter. “You haven’t lost if you haven’t sold” and a slew of other well-intended comments, but hogwash, nonetheless. The issue isn’t how long until you retire. The core issue is how long until you need to access a portion of your resources.
You haven’t saved and accumulated money for 30-40 years during your working career to use it all at once at retirement. You exercised discipline in saving and investing to have a happy retirement that lasts as long as you do. The notion you should change investment behavior because you are no longer working ignores the increase in life expectancy.
When your financial needs change, it is time to consider a shift in asset management style. Investment portfolios need to address your current need more than your current age. Eighteen-year-olds entering college will likely use a larger percentage of their asset base over the next four years than you will at age 50 or even older. The selection of investment tools should be based on your need and your investment discipline.
Back to the travel analogy. Technology is awesome. At the click of an application, I have the ability to know about road conditions anywhere in the country and weather forecasting for the next week. It is very interesting, but is it useful?
We have similar technology in the investment world examining fundamental data, which provides an indication of what to expect over time regarding earnings. We use technical indicators, which are lousy long-term identifiers but show clear historical market behaviors that are helpful in the near term.
Your job is to assess what “traffic” reports you need, the time frame they are most beneficial to your situation, and know how you will apply the information. Emotional responses to poor weather that never actually occurred have ruined more than one well-planned vacation. The same is true for retirement. Your current concern about the market needs to be focused on the money you will need to use for the next 24 months. Financial Enhancement Group stands ready to assist you with those critical “traffic” reports.
Financial Enhancement Group is an SEC Registered Investment Advisor. Securities offered through World Equity Group, Inc. Member FINRA/SIPC. Advisory services can be provided by Financial Enhancement Group (FEG) or World Equity Group. FEG and World Equity Group are separately owned and operated.