What Will the Delta Variant or Afghanistan Debacle Do To Your Retirement? Show 63

Over the weekend, we went to a family birthday party for people that Amelia, our 3-year-old, had never met. A couple of people had brought their dogs and there was also a cat at the house. Amelia was in her element. She loves animals and meeting new people.
Mallory and I have asked ourselves how we produced an extroverted daughter because we both tend to be more introverted. Amelia’s never met a stranger. She walked around like the people at the party were long-lost friends. It was a sight!
Amelia, David's daughter
I’ve always felt like extroverts have an upper hand in life, since they normally have the ability to plug into any situation and feel comfortable. I had a friend when I was about 8-years old or so, and my friend had a pool. His house was the place to be, because he had swimming pool. It was a big pool with a slide and a diving board and deep end. It was a summer paradise for a kid.
The house had a finished walk out basement. You could walk right in the basement from the pool deck, and my friend’s room was downstairs in the basement. One evening, we were supposed to be getting ready for dinner and I was ready before my friend. I walked out to the pool deck, and somehow, I fell in.
I was soaking wet! I scurried out of the pool like an embarrassed wet cat. I changed clothes really quickly, hoping nobody would realize I’d fallen in. Looking back on that, I bet if I would have been a little more extroverted, I could have laughed about it and played it off. Oh, well!
David and Amelia swimming
Last week, the stock market continued its wild streak and continued setting records. While Investing.com had a headline that Consumer Sentiment in U.S. Plunges to Lowest Since 2011. The data was based on a Bloomberg survey.
From the article, “Consumers have correctly reasoned that the economy’s performance will be diminished over the next several months, but the extraordinary surge in negative economic assessments also reflects an emotional response, mainly from dashed hopes that the pandemic would soon end,” Richard Curtin, director of the survey, said in the report.”
Surely, institutional investors are driving the market, trying to squeeze the last drop of gains out. These are companies like hedge funds, mutual funds, and endowments. The government has only talked about tapering its bond buying program that’s providing liquidity to the markets.
Amelia playing in the water
The government, in an attempt to keep interest rates low, is buying $120 billion worth of bonds per month. This increases the money supply and money trickles back into the stock market. When the government does this, the market goes up, but for what? While portfolio values go up, the purchasing power of those funds goes down.
For our folks who are entering retirement or are in retirement, the strategy shouldn’t be keeping up with the stock market. It’s about earning productive returns that can be repeated. When the government ends its bond buying program or an unexpected event happens and drives the market down, you may lose ground. While the 2000 – 2010 period is not typical, some people were never able to recover their losses if they had taken too much risk and didn’t have time to recover their losses.
I’m reading an interesting book called The Psychology of Money now, and the author states, “But good investing isn’t necessarily about earning the highest returns, because the highest returns tend to be one-off hits that can’t be repeated. It’s about earning pretty good returns that you can stick with and which can be repeated for the longest period of time. That’s when compounding runs wild.”
When we’re able to earn consist returns we’re better off than swinging for the fence to hit a home run. In retirement, many times your income will be your outcome. If your portfolio is down your income may be diminished.
The author of the book also said, “Compounding doesn’t rely on earning big returns. Merely good returns sustained uninterrupted for the longest period of time – especially in times of chaos and havoc – will always win.”
Boy, do we have the potential for chaos and havoc? The Delta variant of COVID-19, vaccine debates, a new Middle East debacle in Afghanistan, and many others. Any one of these things can throw your apple cart off if you don’t have a well thought out financial plan to deal with it.
We have the tools to be able to help you avoid common pitfalls people face in retirement. You don’t have to get caught flat footed in the next stock market correction. We want to help you be successful! You can reach our office at 864.641.7955.
Until next week,
David C. Treece,
Financial Advisor
Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Clients Excel, LLC are not affiliated companies. Investing involves risk, including potential loss of principal. Any references to protection, safety, or lifetime income, generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the insuring carrier. This podcast is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet particular needs of an individual’s situation. Clients Excel is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the U.S. Government or any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Clients Excel.

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