It’s getting towards that time of the year, when we all start to think about ‘how the year went’. For most people, the expected wrap up from a financial adviser would be something like:
The ASX200 closed out the year at 5,324 points, up 4.5% over the period… the biggest intra-year decline was 13.7% over a 3 week period in late May… the biggest rally was a 15.3% increase over the 6 weeks from the beginning of August to the end of September*…. And so on and so on.
But does any of that really mean anything?
When we speak to people about their financial situation, most people don’t really care what investment return they got in 2016. And they don’t want to know what sectors outperformed other sectors, or which company had increased profits, or any of those things. What they really want to know are the answers to the big scary questions, the ones that might have been keeping them up at night. For some people this might be ‘am I on track to have enough money in retirement?’. For others it might be ‘am I doing everything I can to be able to reach my goals?’.
While it’s important to understand investment markets, and it’s important to understand the way your retirement savings are invested, this is not the only piece of the puzzle. In fact, too much focus on short term movements of investment markets can actually distract us from the things that we can actually take control of. For example, getting a good handle on your budget, or minimising tax through salary sacrifice, or even just getting clearer about the direction that we want to head in. From our perspective, helping our clients with these questions is really the important part of the role we play as their financial planner.
So as a ‘wrap up’, here are 2 important things that may have happened in 2016
*Please note that this information is not based on fact and is for illustrative purposes only
Written by Dallas Davison.
Dallas Davison, Michael Hogue and Ali Hogue.