“Volatility in the up direction is not a problem-it’s only downward volatility that offers discourse.” ~Coreen T. Sol, CFA®
Far from fleeing volatility, we should embrace it.
Equity Volatility is a good thing! Here are three things to consider:
Volatility is a Saver’s Best Friend
Volatility means frequent discounts on that which you need to purchase anyway. Every time the market goes down, you are given one more chance to buy ownership in the best businesses in the world at a discount.
When the groceries on our list go on sale, we don’t abandon our shopping cart. We stock up if possible. Volatility gives us a chance to do just that.
Keep buying. Whatever accounts you are contributing to should be your most volatile accounts. Take advantage of the frequent discounts and occasional “flash-sale.”
Volatility is the Price for Superior Returns
The long-term track record of the major assets classes are thus:
- Bonds: 6%
- Equities: 10%
If these continue, over 30 years it will turn $100,000 into the following:
- Bonds: $600,000
- Equities: $2,000,000
What price do we need to pay to get those superior returns? More contributions? Higher fees? Surrender charges and backend loads? No.
We must only endure volatility.
80% of Financial “Advisors” Fear Market Volatility
A Natixis Investment Manager’s global survey of financial professionals revealed that 8 in 10 so-called advisors believed that market volatility was the greatest challenge to their success.
Is your “advisor” afraid of that which can generate wealth and a retirement income that grows faster than the cost of living and lasts longer than you and yours?
If you fear market volatility, certainly you don’t need an advisor who fears the same.
Ensure your Financial Advisor is among the 20% that embrace market volatility and have a plan for when that volatility points down. The plan cannot be, “We’ll get out before that happens.” The plan must be, “When this happens, we already have that in place.”
Don’t just endure volatility. Embrace volatility. Tune in to the podcast for the whole discussion.
This article is educational only and is not intended to be investment, legal, or tax advice or recommendations, whether direct or incidental. Again, this is not investment advice. Consult your financial, tax, and legal professionals for specific advice related to your specific situation. Never take investment advice from someone who doesn’t know you and your specific situation. All opinions expressed in this article are the opinions of the people expressing them. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. RetireMentorship is not affiliated with any Registered Investment Advisor, Broker-Dealer, or other Financial Services Company.