Invest for the Long Term

All good things arrive unto them that wait — and don’t die in the meantime.

— Mark Twain, Author

Over the last nine decades, the U.S. experienced 9 bear markets and 15 recessions or depressions, the Second World and Vietnam Wars and any number of crises big and small.

Yet markets have shown a remarkable ability to reward patient, long-term investors for staying invested. This is important, since most of us are investing for the long term.

For a 65 year-old couple, there is a good chance that one of them will live to be at least 95 years old.

We must keep this long time horizon in perspective when judging the success of our portfolio and the financial plan it supports. It is like cooking a turkey for Thanksgiving. Because a 20-pound turkey requires 4 to 5 hours to cook, we do not measure success by opening the oven every 2 to 3 minutes to see how things are going. Instead, we give the oven time to work, checking only periodically to make sure everything is on track (and make any necessary adjustments).

When it comes to your portfolio, don’t judge success on a quarterly or even annual basis. Instead, focus on how you are progressing towards your goals, including any life changes that may impact those goals. This helps you to stay focused on and not let short-term market fluctuations compromise your future. Trust the process and your plan, and don’t open the oven all the time. That way, there is only one turkey involved.