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Are Old Financial Rules Hurting Your Retirement Plans?

We have discussed before that the economic rules that we (baby boomers) were taught as kids are no longer true. One of those “rules” is that in general, the stock market goes up by 9% per year on average over the long term.

The truth is that rule is ancient history, and counting ancient history as “historical performance” of the stock market is misinformed and misleading for many reasons.

Back in the 1800s and much of the 1900s, the government was 90% smaller than it is now and there were significantly less regulations. That meant businesses existed in more of a free market than they do now. A lot of historical economic activity is now either illegal or strangled by regulations.

We weren’t really an internet-connected society until around the year 2000, and that changed everything because the playing field for businesses in America was leveled. The big businesses (that you invest in with stocks and bonds) no longer have an advantage.

The proof is in the facts:

From 2000 to present, the stock market has NOT gone up by 9% per year. It’s been at 4.47%, and half of that (or more) can be eaten up by fees before it would ever appear in your brokerage account, IRA, or 401(k).

Does it make a difference?

Well, if you’re expecting 9% performance, and you get more like 2%…you end up with approximately 80% less money—which is exactly what’s happening to investors who are still using the old methods.

That’s why retirees are stretched so thin…going back to work, living like misers, etc… They didn’t do anything wrong. They worked and they saved, but their money didn’t grow the way they assumed it would.

There are some current strategies and tactics that we are sharing with our clients in an attempt to create an “easier glide path” to retirement. Please let us know if you have a concern about retirement–we may be able to help.



This commentary on this website reflects the personal opinions, viewpoints and analyses of the Gainplan LLC employees providing such comments, and should not be regarded as a description of advisory services provided by Gainplan LLC or performance returns of any Gainplan LLC Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Gainplan LLC manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.

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