When meeting new families, we often find that people are more afraid of market volatility than longevity risk. For those unaware of our financial planning jargon, longevity risk is the risk of running out of money during your lifetime. Few people enjoy market volatility (at least when the market is decreasing in value).
Short Term
In the short term, investing in mainstream companies carries a great deal of market volatility risk. We have no idea what these companies will be valued at during the next day, month, year, or 5 years.
Longevity Risk
However, with history as our guide, we believe in the power of owning mainstream companies that have been through the ups and downs of the market. After all, we only invest the money into these companies that we can afford to own for an extended period (we would define long-term as 5+ years).
The grinding power of inflation fuels longevity risk. In the short term, it might hurt (higher gas prices, higher food prices, etc…), but the families we guide, they will not be running out of money.
However, over a three-decade plus retirement, longevity risk is incredibly powerful.
Consider the $10 burrito at trendline 3% inflation becomes a $25 burrito thirty years into retirement.
How do we begin to devise a plan to protect our family from inflation and the threat of running out of money later in life?
It all starts with a plan.
We love building and monitoring financial plans.
— Nic & Jeff
We are a full-service financial advisory company that allows you to make a one-page plan for your money and prepare for your future. Learn more about what we do and how we can help you here.
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Disclosure: Past performance is not indicative of future results.
