With all the ups and downs in the financial markets, it’s easy to get distracted from your end goals. But in the midst of volatility, it’s more important than ever to remain focused on what you’re trying to accomplish. Goal-based, long-term investment strategies are the best way to ensure your end results align with what you set out to do in the first place.
There are three main reasons we advocate for goal-based, long-term investment strategies: returns, emotions, and focus.
Returns
Historically, the stock market, as reflected in the S&P 500, has outperformed other investment tools over the past 85 years.[1] Even with all its volatility, the everyday investor can benefit from the market’s movement to both accumulate wealth and hedge against things like inflation. Spending time in the market can help you continue to save money to reach your goals, like sending your children to college or retiring at age 60.
Emotions
If you base your investment decisions on your goals instead of your gut feelings or outside advice on “hot stocks,” you have a much better chance of experiencing the returns that can come with even one or two days of market increases. We often joke that investments are the only items that people buy at a premium and sell when they go on sale. What we mean by that is, the majority of individuals buy stocks at their highest, or hottest, and then panic and sell them when those stocks begin to dip. When you buy high and sell low, you’re sure to see your returns dwindle.
Focus
At McCabe & Associates, we advocate for long-term investment strategies that can weather day-to-day volatility and stretch over several years to achieve our clients’ goals. With goals at the center of our decisions, we can help our clients focus on what’s important instead of all the commotion they constantly experience from the media, your friends and coworkers, and sometimes just the random person you sit next to on the train. Our job is to help you block out that noise and focus on your goals.
Our team monitors our clients’ investments each day and makes adjustments to their plans as life changes – not as fads change or events come to pass. We hope you can trust that your financial advisor is doing the same. If you’d like our opinion on your current financial plan, we’d love to offer it to you. Simply contact us, and one of our advisors will schedule a time to meet with you.
[1] As reflected using the S&P 500 index. The S&P Index is a market-capitalization-weighted index of 500 widely held stocks that is often used as a proxy for the U.S. stock market. Standard and Poor’s chooses the member companies for the 500 based on market size, liquidity and industry group representation. Investors cannot invest directly in an index. Index performance does not reflect the expenses associated with management of an actual portfolio. Past performance is no guarantee of future results. S&P data is provided by Standard & Poor’s Index Services Group.