One of the dangers of planning for financial objectives is that in certain economic conditions, a person can sense an ungrounded need to chase what appears to be an opportunity or a direction outside of their chosen strategy. Sometimes these impulses turn out to be more destructive to the long term plan and can cause someone to veer off a good path. I am reminded of a proverb given to us by King Solomon who had been given great wisdom. He said in the book of Proverbs, “steady plodding brings prosperity”. A number of years later, Aesop who lived in ancient Greece and was skilled at telling stories related a fable about the Tortoise and the Hare. The moral was recorded as, ‘Slow and steady wins the race!’ You might want to read that inspired account again.
Maybe there are times as we rush through life trying to reach a goal faster than others when we are distracted and pushed off our set direction. Like the Hare who saw a scrumptious patch of grass and a beautiful place to take a nap, we make the assumption that there is no problem since, of course, we are fast and can catch up anyway…right? Most advisors will help to develop a diversified mix of products in your investment portfolio. Each product makes specific contributions to your long (or short) term goals based on its specific advantages.
For instance, fixed income products and GIC’s offer a higher level of security with guaranteed income while equity investments offer potentially higher growth rates yet with probable fluctuations in value. It is not whether one is more right then another. It is the balance of these in your portfolio which fits your investor profile and objectives that allows it to work for you. Impulse adjustments based on speculation and presumptions can have significantly damaging effects on the outcome of your plan.
If interest rates are very low, you might want to adjust the duration of the terms chosen for fixed income and GIC’s. If markets have corrected significantly you might want to consider directing your additional plan contributions into your equity investments that are ‘on sale’ for a time. Those consistent deposits to your investments are vital for the success of your plan! Whatever the economic conditions, you and your advisor should regularly review your plan, your investment diversification and your acceptable balance of security and risk to ensure your comfort level is maintained.
It may not be exciting or exotic…but the truth is…the steady plodding will have demonstrated how effective it really is once you get to the finish line! In the meantime it is a lot like work!