Investing for Retirement: Goals Over Hype
Investing for retirement is not just about picking stocks or trying to outperform the markets. It's about aligning your investments with your lifetime goals.
While it may be tempting to try to beat the market, this often leads to disappointment and frustration.
One of the reasons for this is that long-term investing can be seen as being boring. The media and other investors often make it seem like there are better strategies than asset allocation, diversification, and rebalancing. However, these strategies have been proven time and again to be effective in helping people achieve financial goals.
The news also contributes to this hype by providing overly simplistic information. Comparing your portfolio to the performance of the latest "hot" fund can be misleading. It's important to compare apples to apples by looking at the specific parts of your portfolio that are comparable to the fad du jour.
Instead of focusing on outperformance, it's important to focus on your long-term financial goals.
Are you on track to achieve the lifestyle you want in retirement?
This is the most important benchmark. Finding the right balance between spending and saving will give you more confidence about your financial plan than chasing investment returns.
For example, consider a couple who wants to retire in 10 years and maintain a certain level of income in retirement. They have a well-diversified portfolio that has earned a steady rate of return over the past few years. They could try to chase higher returns by picking individual stocks or investing in riskier assets, but this would increase the volatility of their portfolio and could put their retirement income at risk.
Instead, they could focus on reviewing their expenses and increasing their savings to ensure they have enough to cover their retirement lifestyle. They could also work with a financial planner to create a more detailed retirement plan that takes into account their specific goals and risk tolerance.
Investing for retirement is not a one-size-fits-all solution. It's important to work with a financial planner to create a plan that is tailored to your individual needs and goals. By focusing on the right benchmarks and creating a plan that is aligned with your goals, you can achieve the retirement lifestyle you want while minimising unnecessary risk.
The goal of investing for retirement is not just to accumulate wealth, but to achieve a life of dignity and independence. By keeping this goal in mind, you'll be better equipped to make the right financial decisions that will help you achieve that things that really matter to you.
For a more detailed discussion on this topic, please feel free to contact us. Our team are always available to answer your questions and to help you with any of your financial planning needs. Here’s what we offer: A cup of coffee… and a second opinion.
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Our job is to make sure that every decision you make moves you closer to your goals.
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