Wall Street is marking 9 years of rising stocks. This bull market is the second-longest streak since World War II. Financial advisor Brad Allen talks with Milwaukee’s WTMJ-4 about what we’ve learned and what we should consider with our money today.
1. Think Long-Term – 401(k) statements were looking depressing as stocks kept dropping during the Great Recession; they kept dropping in value. But, most investors who stuck with a long-term plan and continued to save money are in a lot better shape today. The average baby boomer’s account has more than tripled since the Great Recession. Of course, we can’t predict what’s coming next, but investors should have a solid financial plan built on long-term growth.
2. Age Matters – The Great Recession had a much different impact on young workers in their 20s and 30s than it did for older workers approaching retirement. Younger workers had time to wait for stocks to recover, but a big dip on Wall Street can be devastating to someone who needs their 401(k) to fund their retirement in a few years. Your investments should be diversified and have appropriate risk for your age and how close you are to retirement.
3. Invest with a Purpose – Every investment should have a purpose. Ask yourself, what is your objective and your timeframe for each investment, and do the math to figure out the gains you will need to meet that purpose. For example, you may need a 5% return on an account in order to keep up with your withdrawal rate in retirement. If you are chasing 8% or 9% returns, you are taking unnecessary risks with your money.
4. Control What You Can – Let’s face it: we can plan and prepare for turbulence on Wall Street, but we can’t control it. But we can control other factors, like how much debt we take on and what we put into our retirement savings. Americans are woefully underprepared for retirement. A new survey shows four in ten Americans have less than $10,000 saved for retirement.