Darrell Bryant Retirement Blog

Friday, September 28, 2018

My Three Rules For Financial Success

By Darrell Bryant

We live in an age of information overwhelm. If we have a question, countless answers are at our fingertips. And while many of the answers and advice out there can change our lives for the better, sometimes we just don’t know where to start. This is especially true when it comes to finances. If you want to eliminate debt, there’s the snowball method or the avalanche method as well as a plethora of debt reduction calculators. If you are worried about saving for retirement, multiple articles will give you a variety of different percentages you should be contributing to your retirement accounts and giving you advice on what accounts you should open.

If you are simply wondering what it will take to set your finances up for success and build a firm foundation for the future, step away from your search engine and consider my three rules for pursuing financial success.

1. Save Early And Often

Over 46% of Americans are putting less than 5% of their income into long-term savings. Even those who are saving 5% are still not saving enough. Whether retirement is on the horizon or several decades away, it’s important to start saving as early as possible. Make saving for retirement a top priority that gets funded at the cost of other expenses, like dining out, vacations, and hobbies. Resolve to save any extra income that comes your way, whether from a bonus, an inheritance, or a raise.

One of the most significant benefits of saving early and regularly is the power of compound interest. Compound interest helps the money you put away grow faster due to interest building upon itself. For every year you delay in saving, you’ll have to contribute exponentially more to reach your savings goals because of compound interest. If you start saving $400 per month at age 25, you would have $1 million saved by age 65 (assuming a hypothetical 7% annual investment return). If you don’t start until age 35, you’ll have to save around twice as much to reach $1 million by age 65. It’s truly not about how much you save. It’s about at what age in your life you start saving!

2. Let History Reassure You

Consider placing your faith in long-term market returns over time instead of letting short-term need put your money in harm’s way. The markets fluctuate every day. You’ll only feel increasingly stressed and prone to making emotional decisions if you monitor your performance and adjust your investments every time something unexpected happens. It’s more important to maintain a long-term view and stick to a disciplined approach and avoid making decisions based on what the media is feeding you.

For the thirty years from 1985 to 2015, those who have maintained a “buy and hold” strategy have had average annual total returns of 8.4% with the S&P 500 (a composite of the 500 largest companies, generally regarded as a good representation of the stock market as a whole).

The following graph from CNN Money shows the short-term market fluctuations, which are why so many people leave the stock market in a panic and miss out on the best days. This is the S&P 500 data from the past six months. There are a lot of ups and downs and even a terrifying drop.

A wise investor needs to learn to ignore the short-term noise and be reassured by historical market returns. The following graph shows the same S&P 500 from the 19th century to the present, rather than six months. It draws a much more reassuring picture.

The continual upward trend is tangible proof of the strength and dependability (and also short-term volatility) of the markets. Keeping this picture in your mind regardless of the daily headlines will give you peace and confidence when facing the month-to-month ups and downs. You have over 100 years of history on your side.

3. Work With A Professional

When you partner with an advisor, you are joining forces with someone who focuses on understanding your financial needs and creating solutions to help you pursue your goals. An advisor can help you stick to a long-term strategy, keep emotions at bay, and provide you with guidance and advice that you can’t put a price on. This is especially important if you are reaching the critical milestone of retirement. As Omaha’s Retirement Strategist, I can help you maximize Social Security, navigate Medicare, reduce your risk, and also analyze your long-term care and life insurance needs. My years of experience in helping people retire successfully will be an asset as we work together to create an income plan and withdrawal strategy that fits your situation and works for you.

At D. Bryant Retirement Strategies, we want to help you make smart decisions about your money and achieve financial confidence. If you are looking for someone to partner with you on your journey to retirement, call us today at (402) 932-2141 or email contact@dbretirement.com to schedule a complimentary consultation.

About Darrell

Darrell Bryant, CFS®, CAS® is Omaha’s Retirement Strategist. As the founder of D. Bryant Retirement Strategies, he focuses on helping individuals and couples nearing retirement do so successfully. Along with more than 30 years of experience, he received the Certified Fund Specialist (CFS®) designation and a Certified Annuity Specialist (CAS®) designation from the Institute of Business & Finance. Passionate about helping as many people as possible in his community, he hosts Retirement Strategies Radio, heard Saturday mornings at 8 a.m. on 1110 KFAB. He has also written articles on financial planning that have been featured on Fortune.com, FoxBusiness.com, Money.com, and in the Midland Business Journal. To learn more, visit his blog, his website, or connect with him on LinkedIn.

_________

(1) http://www.multpl.com/s-p-500-historical-prices