Why Time Matters in Investing
Don’t you love the cheesy, old-couple-walking-along-the-beach shots you see in the ads for many retirement funds? They are sweet, and they look so happy, but they make me think fondly of my grandparents – not about revving up my retirement savings.
I love when new customers tweet us excitedly: “My @Betterment account has already doubled the returns I was seeing in my savings account!”… but I try to remind them that the timing is too short to give any real indication of the account’s performance (I know, I know. What a drag).
I can’t say it enough –
Time is incredibly important in investing.
Last week, Matt Krantz from USA Today wrote about a common investing conundrum: why did a certain company’s stock price fall, even though it reported stronger earnings than anticipated? This is surprisingly common, because there are many factors influencing price in the short-term.
Investor sentiment (and subsequent actions) plays a huge role in shifting stock prices. Company announcements, economic data, earnings estimates, inflation, exchange rates, world events, and hype around a hot company are all factors that can drive a stock up or down.
A company’s earnings, growth and cash flow will ultimately guide its stock price, but it’s important to remember the influence of external factors. Stalking the stock market can be fun, but set-and-forget is a much better approach for gaining long-term returns.
Displaying Performance to Shape Better Investor Behavior
Understanding your accounts’ performance can feel complicated. We’re advancing how we display performance to help answer your questions and make stronger investment decisions.
How to Prioritize Your Financial Goals
If you identify all your financial goals for investing, you’ll likely find you can’t fund them all at once. Get our expert view on how to start prioritizing them.
How to Roll Over Your 401(k) to Betterment
Betterment makes rolling over your 401(k) simple and efficient. Get started online, or with a rollover concierge.
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