Question #1: How near or far are you from achieving your retirement savings goals?
Question #2: Where are you going on your next vacation?
If you’re like many Americans, you’ve probably spent more time planning the date, destination, travel arrangements and costs for your next brief getaway than charting out your retirement saving plans.
In my 30+ years in the financial industry, I’ve spoken with countless investors who, countless times over, were convinced that the stock market was about to crash. Every so often, they’ve been correct, at least temporarily.
But I’ve also noticed that the markets have always eventually recovered and continued their long-term ascent. For example, in the early days of Jimmy Carter’s presidency, the S&P 500 Index was at about 100. Today, after 40 years, continuous global unrest, hyperinflation, banking crises, 9/11, Bernie Madoff and many other upsets come and gone … it’s hovering around 2,400.
In my last article, I stated that to be a successful investor you need a combination of science and behavioral determination. Today let’s discuss the science side of investing. This involves building a portfolio that offers the best odds for achieving your financial goals with the lowest possible risk. How do we do this? It’s tempting to dive right into picking “winning” holdings. In reality, that’s the last, least vital step: