05 Sep This Is Why The Stock Market Doesn’t Matter To Millennials Saving For Retirement
This Is Why The Stock Market Doesn’t Matter To Millennials Saving For Retirement
Does the recent fall in the market worry you? Depending on your age, it shouldn’t. If you’re a millennial, there’s something else that should worry you more. The good news, though, is that it’s something you have total control over.
If you’re like most investors, you read the results of the market every day. In fact, the larger your investment account, the more attention you pay to the market.
In all likelihood, the biggest investment account you own is your retirement account. If you’re invested for the long-term, your retirement account will go up and down with the market. Because of this, it’s common for someone in your position to want to learn more about investments and how to measure them.
Don’t bother. You can’t control the market. Focus instead on something you have the power to make a difference in.
“Investing metrics don’t matter unless there is money to invest,” says Jennifer Ellison of BOS, a wealth management firm in San Francisco. “Without saving, investment metrics make no difference. But once you begin saving, it is very important to let investments do the work over time.”
Time is the key factor here. The more time you have to save until retirement, the less concerned you should be with investments. While day-to-day fluctuations can exhibit wide swings, the markets tend to produce a reliably consistent range of returns over long periods. Smart retirement savers know how to take advantage of this reality.
“Time in the market matters more than timing the market or trying to pick the next Apple AAPL +2.1% or Amazon AMZN -0.3%,” says John Madison, Financial Counselor at Dayspring Financial Ministry in Ashland, Virginia. “Historical returns show us that investing early and at regular intervals provides better long-term results, regardless of the specific allocation chosen. Savers can’t control much in the investing process, but they can control when and how often they invest.”
“Time is the number one factor for the best retirement plan, and one that most investors ignore or do not understand,” says Curtis Ray, CEO of SunCor Financial in Gilbert, Arizona. “How much money you can set aside in a secure place and then allow time to enhance the compound interest inside, is a guaranteed path to wealth for anyone who gives their money enough time to work.”
Do you recall the lesson from the fable involving the tortoise and the hare? In modern times, the hare would be more concerned with investing. The tortoise would be more concerned with saving.
Remind yourself again which critter won.