Financial Planning Fridays #117: Staying Invested in 2024

Hi Friends, Each year on Jerry’s birthday, he loves taking an updated look at all of the crises in his career. As you’ll see, at the time, each of them would have given us great reasons to not keep our clients invested in stock. Every single year had its own unique crises that looked, and felt, brand new to the world and came with their own new set of risks. Every single time we could have said that this time is different – this time, we should recommend that clients sell their stock, avoid these risks from this new never before seen event, and perhaps reinvest after this crisis is solved. However, looking back, this always would have been a huge mistake. The returns over the past 24 years, and for the past 100 years for that matter, have come from remaining optimistic and believing in the world’s ability to adjust and adapt, staying invested through each crisis, and rebalancing along the way. We prepared this chart to show you each annual crisis for the first 23 years of my career with the subsequent return of the S&P 500 up until this year. The hard part wasn’t finding a crisis each year. The hard part was choosing which, from the wide variety of negative global, economic, and political events that occurred each year, to fit on to our chart. This chart has one or two of the crises for each year listed and the return of an investment in the S&P 500 from January 1st of that year until October 2024. As you can see, despite all the crises that have occurred over the past 20+ years, the market returns have been quite good. The returns range from 21% in the short-term up to more than 872% since 2003! This chart shows the total return instead had you decided to move your investments to 10-year treasury bonds to avoid taking the risk each crisis presented. The range of returns dramatically decreased from 13% recently to a best case of 97%, since 2002. Finally, this chart shows you how much more a $1 Million investment account would be worth today if you had remained invested in the S&P 500 rather than moving to the 10-year treasury bond. This is a stunning amount of money that could have been used to take additional vacations in retirement, paid for the college education of an entire family generation, or provided an enormous gift to your favorite charity. Quite simply, it may be the difference between doing the things you have always dreamed of vs. not being able to for financial reasons. This is why it is so important to stay invested no matter what the world gives us. Sir John Templeton famously said, “The four most dangerous words in investing are, it’s different this time.” 2024 already has its own new set of challenges with multiple wars, increasing global tension, and a very contentious election. What will happen next with each of these? We have no idea and neither does anyone else. However, we are very confident that whatever happens, our clients will be ok because of their solid long-term financial plans and our ability to proactively take advantage of temporary market volatility. Thank you and we look forward to talking with you again soon! Be on the lookout for our next Financial Planning Fridays episode. Subscribe to our Youtube Channel so you never miss an episode. Or contact us directly; schedule your 15-minute call with us today.