Don't Make Retirement Investing Decisions Based on a Headline

Scott Peterson |
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The other day I saw a headline “Cancer overtaking heart disease as leading cause of death in many states”.  The headline grabbed my attention and I continued to read to see if my state was one of the states where cancer was on the rise. Upon further investigation I found that cancer deaths per capita are lower now than at any time in recorded history. What is really happening is that with fewer smokers and healthier lifestyles, heart disease is killing less people thus making cancer, with the lowest death rate in history, the number one cause of death in certain states.

I don’t think there was any attempt to deceive the reader in the headline about cancer and heart disease, but I see on an almost daily basis attention grabbing headlines from the financial media that will say anything to capture the reader’s or listener’s attention no matter how deceptive their headlines might be. 

CNBC ended 2018 with the following headline: “US stocks post worst year in a decade as the S&P 500 falls more than 6%” then my radio tells me we just had the “worst December for stocks since 1930”.  

These factually true, yet misleading headlines are quite shocking if historical perspective is not provided and historical perspective is never provided. Historical perspective destroys the “shock and awe effect” and frankly, shock and awe sells. Historical perspective also destroys the credibility of any person or entity that sells shocking headlines about equities to the public. So, you aren’t going to see much historical perspective from the financial media any time soon. 

Let’s put some historical perspective with those truthful yet misleading headlines. Money invested into the S&P 500 at the beginning of 2018 would have lost 6% for the year but a prudent investor would not invest short term money (one year) into a long-term investment such as equities.

What would be the current value of $10,000 if it were invested into the S&P five years ago or in December of 2013? Today’s value would be worth $14,894 or an annualized return of 7.4%. 

How about $10,000 invested ten years ago or in December of 2008? That $10,000 would have grown to $32,771 today representing an annualized return of 12.6% for the decade. 

How about investing over a long period, say since the end of WWII? $10,000 invested into the S&P 500 since May of 1945 would be worth more than $18 million averaging an annualized return of 10.76% per year. 

What is the moral of this story? Ignore the shocking short-term headlines when it comes to your long-term investments.

Scott M. Peterson is the founder and principal investment advisor of Peterson Wealth Advisors. Scott has specialized in financial management for retirees for over 30 years. Scott is a regular presenter at BYU’s Education Week and speaks often at other seminars regarding financial decision making at retirement. He also literally wrote the book on retirement income, Plan on Living: The Retiree’s Guide to Lasting Income & Enduring Wealth.

If you are getting close to retirement and will have at least $500,000 saved at retirement, click here to request a complimentary copy of Scott’s new book!