#6 Market Returns
You can watch CNBC all day long and actually be less informed about the current state of the market than at the beginning of the day. For every bull market opinion there is likely a cautionary tale. For every successful stock pick a colleague tells you about at the water cooler there are likely a half a dozen more that weren’t mentioned of varying success.
Market returns are the #1 cause of phone calls we receive. Is the market high or low? Should I do my RMD now or later in the year when stock market returns may be higher (they also could be lower)? Is current trade policy going to sink the market? Are higher interest rates going to eat into my fixed income returns and if so for how long?
The day to day and month to month iterations of the market can be unnerving. It is why 401K investors have historically not done as well as pension investors. The emotional toll taken frequently forces action at the wrong time. Sticking to an asset allocation that you can live with (item #2), is the one sure fire way you can mitigate & navigate the highs and lows of the market. It doesn’t mean you won’t lose money, I can guarantee you will at some point(s). It does mean that you are accepting the inevitable which is the market is going to go up & down.
It is going to do that at times that are terribly inconvenient for you as a retire as well. Focusing on the items you can control and then setting an allocation that has volatility you can live with (and market return expectations you need to fund your retirement) is the key to 401k success. #401k, #403b, #457b