Your Retirement = Your Responsibility

Investing isn’t about mastering the markets; it’s about mastering yourself. Warren Buffett called Benjamin Graham’s book “The Intelligent Investor” the best book about investing ever written and this was a central tenet of his book.

First, to be crystal clear, not everyone needs a financial advisor. If one has the time, knowledge, discipline--and emotional control during bear markets, it may be possible for certain individuals to handle their own investments and financial planning. But this must be an honest decision:  Are you not hiring a financial advisor because you KNOW you can do the job correctly? Or is it only because you want to avoid paying a “fee”?

This is an important distinction because when it comes to our own personal financial and retirement planning, we are on our own. The job needs to be done properly if you want a secure future. Nobody is going to come save you. There may be government “bailouts” in other areas (like with banks and student loans, etc.) but your retirement is your responsibility.  

In a world where geopolitical chaos looms large and financial uncertainty seems to be increasing for many each day, the phrase "you are on your own" resonates with a sobering clarity. You must take the reins of your financial life.

Jason Zweig’s recent piece in the Wall Street Journal “You’re Not Paranoid. The Market Is Out to Get You” really drives home the point. We have often written that there has never been a better time to be an individual investor: With the explosion of the ETF industry, investors have access to an unlimited number of investment options to consider, when years ago, this menu was much smaller. However, as Zweig notes in his article, with so many choices, it also seems “it has never been harder to be a disciplined and independent investor.”

Why? In today’s fast-paced, interconnected world, we often find ourselves bombarded by distractions and temptations that can lead us astray. Just as in the financial realm, where complex products may promise riches but often deliver heartache, life's myriad of choices can lead us down risky paths if we are not careful.

For example, think about the allure of instant gratification—whether through financial speculation or other fleeting pursuits. The ease with which we can access information and embark on opportunities can be double-edged. While it empowers us to make informed decisions, it can also lead to impulsive actions that we might later regret. [As fiduciary advisors, when it relates to financial matters, we recommend establishing clear guidelines.]

The distractions are endless…whether it is some new complicated investment product or some dire warning about how the market is about to crash tomorrow…and how you MUST do this or you must do that. But is it constructive to follow these distractions? Assuming you have a long-term investment plan, do you have the emotional fortitude to stick with it, despite these pleas to jump into something “new” in that day or moment? Do you succumb to FOMO (the fear of missing out)? If you can answer these questions honestly, your future self will thank you.  

As Graham wrote in his book, the investor’s chief problem --and even his worst enemy---is likely to be himself. As Graham describes, “To be an intelligent investor doesn’t require a stratospheric IQ. It does require discipline and the ability to think for yourself.”

He also notes—importantly—the fact that individual investors are scarcely ever forced to sell their holdings.  Unlike professional portfolio managers, who are continually measured against the short-term performance of the market, long-term investors should never feel compelled to care (let alone “follow”) what others may be doing in the near-term.

In fact, it is this independence which is our single most valuable asset! Yet, instead of embracing this notion, the average investor often puts themselves at a disadvantage by “worrying” too much about what they read on social media and/or reacting to the short-term noise and distractions.

So how do we thrive in this reality? Here are a few strategies to consider.

Building Your Own Path

1. Build Financial Goals: Starting your plan with the goals you would like to achieve can help motivate you to focus on the steps required to get there!
2. Create a Plan: With your goals now in mind, what do you have to do financially to get you from where you are now to where you want to go. This can be a combination of savings, cash flow changes, investment growth and may even take you back to hone some of your goals. For example, if you have $XX in savings today, but decide that you need multiples of $XX in the future, then your investments may need more growth-oriented investments than, say, bank CD’s or treasury bonds.
3. Set Boundaries: As with our personal lives, recognize what you can and cannot tolerate.  With investments, we should articulate what we won’t invest in and understand that there will be financial hurdles, delays and disappointments along the way even if we stick to our principles.
4. Seek Knowledge: Knowledge is your greatest ally. Financial literacy, emotional intelligence and knowing when to ask for help--the more you know, the better equipped you'll be to navigate challenges.
5. Practice Self-Reflection: Regularly take time to assess your choices and motivations. Understanding the reasons you made a particular decision can help you align your actions with your goals…..and may even help you avoid bad decisions in the future.
6. Cultivate Resilience: Life is inherently unpredictable. Building resilience through small, consistent positive habits can prepare you to face adversity. Remember, setbacks are part of the journey, and learning from them is essential.
7. This is Not “Set it and Forget it!”: Even the best made plans require review. We discussed this topic in a recent blog outlining why it is important to consider updating your investment portfolio.

Conclusion

Read the Zweig article in the WSJ. Your future self is depending on you to be honest with yourself. When it comes to securing our financial futures, we are on our own. Day to day we are bombarded with recommendations of what we should be doing with our money. Are you able to decipher between what is really good advice and just a sales pitch? Can you focus on your plan and not be distracted by all the noise around us? As an example, there is constant talk about what is “outperforming” or “underperforming”. Again, this is so misleading! It is a purposeful sales strategy to encourage us to constantly shift our investments. This distracts us from what really matters, which is: Are we getting the returns we need to secure our future given our own unique personal goals, objectives, and ability to handle and understand risk? Unfortunately, the average investor usually gets this backwards, and is simply a hinderance to achieving his/her own financial independence!

Develop a plan/strategy, build good savings habits, monitor and make adjustments to your plan along the way, MAKE SURE you stay disciplined and unemotional, and MINIMIZE your mistakes! Don’t allow yourself to be side tracked by all the distractions in your way, and allow the 8th wonder of the world to work for you—i.e., compounding investment returns--and you can secure your future financially.

Disclosures: This is not an offer or solicitation for the purchase or sale of any security or asset. While the information presented herein is believed to be reliable, no representation or warranty is made concerning its accuracy. The views expressed are those of NCM Capital Management, LLC and are subject to change at any time based on market and other conditions and NCM does not undertake to update or supplement its newsletter or any of the information contained therein. Past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will be profitable. There is no guarantee that the investment strategies discussed above will work under all market conditions or are suitable for all investors and each investor should evaluate their ability to invest long-term, especially during periods of downturn in the market. Investors should consult their investment professional prior to making an investment decision. Investment advisory services are offered through NCM Capital Management, LLC, an SEC-registered wealth advisory firm domiciled in New Jersey. This communication is not to be construed or interpreted as a solicitation or offer to sell investment advisory services.  For additional information about NCM Capital Management, LLC, you may request a copy of our disclosure statement as set forth on Form ADV. Readers are encouraged to consult with their own professional advisers, including investment advisers and tax/legal advisors. NCM Capital Management, LLC does not provide legal or tax advice. NCM Capital Management, LLC can assist in determining a suitable investing approach for individuals, which may or may not resemble the strategies outlined herein. The graph above assumes that both retirees earn a 6% annual rate of return outside of the (-15%) drawdowns which are outlined in the text.