Times ARE Scary – but…

Last week, as the media recounted the poor performance of major stock market indexes, my wife turned to me and asked, “How are we doing?” Implicit in her question: “What’s the effect of the recent decline on the dollars in our portfolio?” Or, in her words, “How much have we lost?”

My answer: “I don’t know, and I don’t want to know.”

Now you may think my answer was rooted in fear – and to be honest, maybe a little. You might even think I was trying to hide the damage from my wife. But that’s not the case at all. Mostly, my answer came from a place of “it doesn’t really matter.” And that wasn’t me being defeatist. It’s because I have a long-term plan, and that helps me maintain a long-term state of mind.

My answer came from a sense of peace and confidence. I chose not to know “the effect of the recent decline on the dollars in our portfolio” because I already knew (and have known for a while) our long-term projections, even with these current events built into the results.

For the sake of this blog, though, I’m going to disclose what I was reluctant to discuss before: I’m going to log into OnTrajectory, update my “actual progress,” and share the results with you. 

Behold, the past 16 years of my financial life as of 5/10/2022:

I’ve been tracking my assets since around 2007. Although I didn’t have OnTrajectory back then, I had made my own projections based on spreadsheets and complicated macros. At that time, financially, I was ahead of the curve, and I wanted to be able to visualize not only the curve but my progress against it. In June of 2007, I was about 15% above my projection. A little over a year later, at the end of 2008 (depths of the great recession), I had fewer assets than when I started tracking and was 40% below my projection – which was gut-wrenching. I was very unhappy. I was not the man of contentment I am today.

As anyone familiar with “sequence of return risk” will understand, it took me considerable time to get back on the curve I originally envisioned: a decade, to be exact. Then, based on a financial risk I took in 2018 that didn’t pan out, and the brutal dip at the beginning of the COVID-19 pandemic, it wasn’t until recently that I was comfortably ahead once more. 

Then came 2022. Where am I now? As shown in the image above, I’m right on course.

Not only am I on course, but I’m emotionally comfortable with the current situation. Let’s take a look at a few more illustrations. First, the S&P 500 for the past year (-5%). Ugly, yeah, but not horrible.

Now let’s put it in context. Below are the past 2-year and 5-year charts:

S&P 500 Past 2 Years (+18%)                            S&P 500 Past 5 Years (+39%)

Viewing S&P returns in this way always helps soothe me during times of financial stress and volatility, but not as much as the first chart I shared – the one that reflects my actual ability to save, to dependably earn returns, and to confidently recover after market downturns. That first chart is the source of my equanimity, and it’s why I could answer my wife confidently that we needn’t get hung up on the question, “How much have we lost?”

And so, here’s my main point – the “but” in the title of this article. Yes, these times are volatile and scary, but if we take the time to use a tool like OnTrajectory, where we can establish a baseline and track our progress, the peace of mind we ultimately gain will help us deal with stress. I personally believe that over the long term, that peace of mind will pay real mental health dividends. You see, the “power of compound interest” does not affect just financial growth – it also powers happiness.

I believe that smiles compound, that goodwill compounds, that one\’s sense of wellness and confidence compounds. It’s not the intensity of happiness in our lives that makes the difference, it’s the duration. 
I think that having clarity about one’s financial future is a huge part of this feeling, which I call “Happiness Equity.” It’s why I founded OnTrajectory and it’s why I’m always looking for ways to encourage others to get a plan established and to make the plan a priority in their lives. Whether you’re a professional Advisor, Money Coach, or just a person interested in personal finance – I hope you’ll help me spread the word to get more folks on a path to financial peace of mind and to build their happiness equity beyond all imagination.