Jim Lorenzen, CFP®, AIF®
This sign represents the off-ramp many pre-retirees are seeking; but, there are usually many unforeseen detours before getting there; and, too often, far too many unpleasant road closings after finding it.
Example: Average annual (arithmetic) returns tend to reflect how an investment has performed, while it’s compound (geometric) return may be more indicative of how the investor actually fared; but, that’s only part of the story. In the real world, most portfolios have cash flows.
During our working years, we’re adding money to our investment nest egg; but, at retirement we begin taking money FROM our investments. This presents a very different dynamic when a down market hits and we’re reducing our assets via withdrawals, too – and, it can change the probabilities of success going forward.
Understanding Investment Returns just might help pre-retirees, as well as those already retired, to better grapple with the sometimes confusing overwhelming data provided by financial product distributors who can sometimes make it into a shell-game.
You can get yours here.
Enjoy.
Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER® professional and An Accredited Investment Fiduciary® serving private clients since 1991. Jim is Founding Principal of The Independent Financial Group, a registered investment advisor with clients located across the U.S.. He is also licensed for insurance as an independent agent under California license 0C00742. The Independent Financial Group does not provide legal or tax advice and nothing contained herein should be construed as securities or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader. The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional.
