Understanding the Past is a Clear Strategy When Investing for Retirement
“To understand what is happening today or what will happen in the future, I look back.” – Oliver Wendell Holmes
Investing for retirement requires a solid measure of discipline. When you’re in the stage of life when you need to set aside money for retirement, it sometimes seems as if you can’t possibly squeak another dime into a 401(k) or another investment vehicle. You’re busy raising a family and building a career, so the discipline to designate money for retirement investing requires constant attention.
Besides this core discipline, investors preparing for retirement also need the ability to look back. As Oliver Wendell Holmes famously said, a focus on the events of the past is valuable for understanding the events of today, and that wisdom aligns with what the most successful investors share about their approach. In fact, you’ll find this famous quote about looking back in the extensive collection of our founder, Ken Kroeker, because it matches his approach to investing and serving clients.
When you focus on fundamentals, rather than chasing the latest Wall Street predictions, you imitate the discipline of some of the investing giants, from Warren Buffett and Peter Lynch to Benjamin Graham and Bill Miller. Each of these investors has built their wealth by using value-investing principles.
You can apply those same principles when investing for retirement. Investors like Warren Buffett may beat the average returns in the market by ignoring the latest headlines and, instead, focusing on the foundations of a company. In other words, when a company is going through a short-term challenge, but they are built on solid business principles, it may be a good investment.
A good current example is Wal-Mart. They’ve closed some stores and often appear to be playing catch-up with Amazon and Costco, but they’re still the most prominent leader in discount retailing in the world and have a history of delivering value over time. The overreaction of the market to Wal-Mart’s challenges make it look like the company is facing an overall decline, but the investor that looks back can see that companies with proven track records usually rebound from challenges.
When you objectively look at the history of a company, and you pair it with confidence that market downturns tend to sort themselves out eventually, you’ll be able to make investments that support your retirement planning.
Investing for retirement requires both discipline and an understanding of past events. It also requires the wisdom of a professional advisor to help guide your investment decisions. Make an appointment with the Lawson Kroeker team and find out why a combination of looking back – and carefully and strategically looking forward – can be part of your individual plan for retirement success.