Reflection No. 40

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Top of the morning to ya, and welcome to Reflection No. 40! This week on Reasoned Reflections we discuss savings targets, patience in investing, and taking risks. 

Three Quick Hits:

• Article: Savings Goals

  It’s generally recommended to save 10–15% of your income each year toward retirement to help ensure a comfortable life in your golden years. Of course, saving at the higher end—or even exceeding that range—gives you a stronger cushion and more flexibility down the road. In Q1 of this year, Americans came close to achieving the 15% savings target in their 401(k) contributions. Let’s hope that momentum continues.

• Tip: Be patient. Long-term investing allows your money to benefit from compounding and market growth over time. 

• Quote: “The ability to create its own market is the strategic, the dominating, and the single most distinguishing characteristic of a true growth company.” - Peter Bernstein 

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Two Questions:

• Are you still on track to meet the money goals you set at the beginning of the year? 

• What’s one financial decision you made this year that you’re proud of and why?

REFLECTION No. 40: Risks

I - Issue: How should your personal risk tolerance guide your investment decisions?

R - Rule: All investing involves risk. However, the amount of risk you take depends on your ability and willingness to handle the ups and downs of the market. Your timeline, financial stability, and emotional state influence risk tolerance.

A - Analysis: We all take risks every day. Driving to work. Starting a new job. Moving somewhere new. Choosing to invest is no different. Without risk, however, there is no reward.

Some people can stomach seeing their portfolio drop 20% without flinching. Others might begin to panic when it dips 2%. Neither is right nor wrong. The key is knowing yourself well enough to invest in a way that allows you to continue riding the wave when things get bumpy.

Different assets carry different levels of risk. Stocks fluctuate more than bonds. Crypto is riskier than index funds. You don’t need to chase meme stocks or hide in cash. You need to take the right amount of risk for you. That’s how you stay consistent. And staying consistent is how winning is done.

C - Conclusion: Risk is part of life. The goal isn’t to avoid it, but to take the kind of risks that align with your goals and temperament.