Running Toward Financial Purpose

Having now completed 5 marathons and numerous half-marathons, one thing I learned was to fix my mind on what I wanted to accomplish.  If I walked out the door saying, “I’ll just run for the heck of it today.”  Without exception, I would be back at the house shortly after leaving.  If I needed to run 6 miles, I had to walk out the front door telling myself “You are running 6 today.”  Running with a purpose brought about the desired result.

Many things in life work this way.  As Zig Ziglar taught us, “If you aim at nothing you will hit it every time.” 

Understanding whether your money needs to run a Sprint or a Marathon makes a difference.  Do your assets have differing goal time frames?  Knowing will help you decide where and how to invest.  You don’t risk the potential of a down stock market for short-term money.  Your money will typically be in risk-free or low-risk bank accounts or CDs.  That way you have little concern over the day-to-day ups and downs. You’ll be taking that money out soon and simply need it to grow at what interest rates will provide you.

If your goal is long-term, you do not want to lose out on the potential of the larger rewards that higher-risk investments like the stock market have historically yielded.  If the money you are investing will not need to be touched for 30 years; would you rather average 5% or 10% a year?  Focusing on the 30-year time frame is vital.  When running a marathon, you do not start to sprint at mile 6…You have 20 miles left to go!  If the market has a bad year in year 6 of a 30-year retirement investment goal, you do not cash everything in and vow to never go back to the stock market as you have 24 more years to go. 

The S&P 500, one of the broader measures of the stock market, has had positive returns 74% of years over the past 95 years.[i]  Not a guarantee for future returns, but quite the track record to have a positive return 3 out of every 4 years.  Imagine instead of panicking during the stock market crashes of: Black Monday, Internet Bubble, 9/11, 2008 financial crisis, COVID and the bad year we just had in 2022 if you would have instead bought at the lower end of the stock market with your long-term money.  You potentially would have done well. 

Having a goal and knowing which portions of your investments are short-term, long-term, or somewhere in between will make a big difference in taking the best advantage of all the financial opportunities that exist.  Not to mention you’ll rest easier at night.      _________________________________________________________________

[i] S&P 500’s Impressive Rate-Of-Return Score: 70-25 (forbes.com)

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