Page 3 - SixMistakesSuccessfulWomenMake22
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Here’s an example of an opinion: “Investing for the long-term is a major key to the
        success of your financial plan.” Please tell me how can you verify that statement?

        W ell,  for  example,  W   Street  professionals    typically  attempt  to  do  so  by
        pulling out a beautiful chart that shows how between 1936-2015 the stock markets
        actual rate of return was 10.40%.* Know this: Investing over the long-term is not

        investing for YOUR long-term! I have yet to meet someone who said, “Hey T ony ,
        my  long-term  investmen  horizon  i  79  years.  However    have  me  plenty  of

        peop  who v  anywhere between 15 and 30 y    being long-term… that’s
        long enough in the mind of the typical woman on the street.



        Let’s consider the example of a 49-year-old woman who wants to retire at the age

        of 65. If she starts in the year 2000 and continues to contribute funds for 16 years,
        she  will  no  doubt  be  looking  for  the  magical  10%  return  the  financial  gurus
        promised  her.  She  has  already  accumulated  $500,000  and  diligently  invests

        $15,000 per year every year for 16  years. Using the same stock market index that
        exhibited  a  10.40%  return  on  investment,  our  investor  will  only  yield  a  4.74%

        return, and that’s before taxes and fees! It gets worse…


        W all  Street  does  not  work  for  free;  so  let’s  deduct  a  modest  1%  fee  for  their

        services.  The  rate  of  return  is  now  3.73%.  So,  a  $500,000  starting  balance  with
        $225,000  of  additional  investment  ($15,000  per  year  for  16  years),  is  actually

        worth $1,230,937.*



        Our investor took 100% of the risk and invested 100% of the money in a situation
        that  was  fraught  with  risk  over  which  she  had  absolutely  no  control  (the  stock

        market),  only  to  earn  3.73%  ROI.  Oh,  by  the  way,  W all  Street  was  paid  without
        putting  up  a dime  or  taking  any  risk.  Something  does  not  quite  stack  up  here.  It
        doesn’t feel right! Trust your guidance system, your intuition.









        *Source: Truth Concepts and Pinnacle Data Corporation. Assumes stocks mirror the Standard and Poor’s 500. The performance of an
        index is not indicative of the performance of any particular investment. Individuals cannot invest directly in an index. Past perfor-
        mance is no guarantee of future results
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