You want strong investment performance. And you should.
The money you’ve worked hard to save and invest should have every chance to grow.
While you want your money to grow, though, few people would say their life’s goal is to build the largest possible nest egg. Almost no one wakes up thinking, “I hope my portfolio beats the Russell 2000 this year.”
That’s why I encourage clients to name a goal for their money.
What do you want to use your money for?
Typical answers I get include:
- So I can retire confidently or quit my job.
- So I won’t run out of money.
- I want to help my kids buy a house.
- I want to pay for my grandchildren’s college.
Here’s why naming a goal matters.
Imagine two investors. One earns an average return of 8 percent over time, but has to delay retirement, worry about healthcare costs, or say “no” when a child needs help. On paper, the performance looks good. In real life, it feels like failure.
Now imagine another investor who has a lower risk tolerance, ultimately averaging a 6 percent return. Not headline-worthy performance, but she retires when planned, travels a few times a year, helps a daughter with a down payment, and never lies awake worrying about running out of money.
Higher returns don’t help that much if they come with too much volatility for your comfort, or when poor planning or personal choices (such as spending habits) stop you before the money ever has a chance to support your goals.
Freedom, confidence, and charity
No matter what words they use, I almost always hear the themes of freedom, confidence, and charity when my clients talk about their aspirations.
Freedom from a job you no longer want.
Confidence in knowing you’ll be okay no matter what the market or life throws at you.
And charity: the ability to help the people you love, and causes you care about, while you’re alive to see the impact.
We want investment returns to yield certain outcomes, not just numbers on a statement. Performance only matters in the context of what it allows you to do.
If you’d like to talk about building a portfolio that aligns with your goals, schedule a call with our team today!