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Retirement Investing Through Uncertainty

Retirement Investing Through Uncertainty

April 23, 2024

We can look back at any year in history and find reasons to be uncertain about the short-term future of the stock market or economy. That is no different now in 2024. We have inflation conversations every day, an election looming later in the year, and geopolitical tensions continuing to make headlines. But, all of these reasons can be seen as a reason why it is just as important as ever to make sure we are continuing investing into our retirement accounts. 

But, why is this the case? 

The main answer is that you aren’t investing for today or tomorrow. You aren’t even investing for next month or next year. If we are investing for retirement, we are investing for the next 5, 10, 15+ years or maybe even longer than that, 30, 40, 50 years. So when we look at that scope. Why would a headline of what is happening today, deter us to invest for a result that we are looking for decades from now? 

Take inflation and an oil price shock for example. An issue we have today in inflation and another that sparked concerns after Israel and Iran tensions. But we can also briefly take a look at the early 1990s for an example of a similar type situation. We experienced a mild recession from 1990-1991 partly as a result of tightened monetary policy from inflation we had in the 1980s and then an oil price shock in the 1990s. So, if you were afraid that the inflation we experienced in the 1980s would continue into that recession in the 1990s and that we would be in real economic trouble for the long term after the oil price shock, and you never invested in the market? You would have missed the roughly 1,061% return that the S&P 500 has had from 1990 to 2024

How about we use something more recent. Let’s look at 2009. Following the financial crisis there was fear and uncertainty everywhere. We just experienced a horrendous banking collapse. So if you were afraid that our economy wouldn’t recover, you would have missed the roughly 354% S&P 500 return from 2009-2024. 

And even more recent? 2020 to 2024 you would have missed out on a roughly 25% return. 

The point being, there is uncertainty and fear in any year and decade. However, historically, investing during these times has been a good strategy.

These are the most important times to add to your retirement accounts. It is important to remember that past performance does not guarantee future results, but we have seen historically that we can work through this uncertainty. And when you are buying solid companies at those lower prices, when things even out again, those companies may grow again. You’ll be there for the entire ride. And it won’t always be easy, but keeping it consistent in your retirement accounts and investing no matter the economic and stock market headlines may put you in a much better position once retirement comes. 

So next time you see a headline that worries you, or the market pulls back on the latest news, remember that your retirement investing is for the decades to come, not today or tomorrow.