Often, people view investing primarily as a pathway to financial gain. However, while generating wealth is certainly a significant motivator, it is not the only reason we invest, and for most people, is not the primary reason.

Financial planning is about achieving your personal goals and vision, both now and in the future. Proper planning enables you to have the independence to do what you want and the peace of mind to know you will be able to retire optimally. At its core, investing is a means to that end — achieving your personal vision and long-term goals.  These could be paying for a child’s education, buying a boat, retiring or anything else that is important to you.

It’s a journey that requires patience, discipline and a broader perspective beyond the fluctuations of your assets and the broader markets.

Our entire team helps clients with Personal Vision Planning^® — not just investing or financial planning. We want to understand what your personal vision is and then be your partner for the long term as you set out to achieve it. Personal Vision Planning encompasses tax and estate planning, investing assets, minimizing taxes and expenses, and protecting your assets from creditors and predators.

A myriad of considerations go into creating a personal plan for you; which is just the first step. Once we have set up your personal financial plan, we continually monitor it and update your portfolio and planning as needed, based on your circumstances, legislative changes  and market fluctuations. This requires looking beyond just the numbers and tuning out all the noise we are exposed to daily.

Returns Don’t Tell the Whole Story

Just looking at the percentage return on an investment doesn’t really give the whole story on what you made.

In the real world, both the sequence of return and overall volatility make a big difference. For example, let’s say you invest $100,000. In the first year, the value of your portfolio goes down 50 percent, and in the second year, it goes up 60 percent. Your simple average return is 5 percent per year (60% – 50% = 10% / 2). Yet the $1,00,000 you invested is worth only $80,000. ($100,000 – 50% = $50,000, plus 60% is $30,000 = $80,000.) On the other hand, if you made a simple 5 percent return per year, you would have $105,000 at the end of the first year and $110,250 at the end of year two.

The role of our team is to minimize volatility while maximizing net cash flow. We are focused on guiding you to achieve the best net return after taxes, fees and expenses while managing your cash flow.

The Deeper Purpose of Investing

When thinking about why we invest, it’s crucial to go beyond the numbers and charts. Here are three fundamental reasons why we choose to invest:

1. To achieve financial independence: Investing helps us build a financial safety net, which provides us the freedom to make choices without being constrained by financial limitations. This could mean retiring early, starting a business or having the flexibility to pursue our passions.
2. To obtain security and stability: By growing our wealth, we can secure our future and that of our loved ones. This involves planning for significant life events such as buying a home, funding our children’s education or ensuring a comfortable retirement.
3. To leave a legacy and impact: Many of us invest with the intention of leaving a legacy. This might involve passing on wealth to future generations, supporting charitable causes or contributing to community development.

Investing Is a Long-Term Process, but the Media Are Short-Term-Focused

Investing is not a get-rich-quick scheme. It requires a long-term perspective and the ability to stay the course despite market volatility.

However, the influences on our lives — especially the media — are focused on the short term. It can be easy to feel pressured to react to market and economic fluctuations. The media tend not to believe in buy and hold; instead, they believe we must proactively take advantage of market and economic conditions. I urge you to resist this approach. Here at Carver Financial, we do not believe anyone can time the markets, although we can take advantage of what is happening.

To time the market successfully, you have to be right twice. You have to sell at the right time (sell high), and you have to buy back into the market at a low (buy low). It is very difficult to achieve this on a consistent basis over the life of your portfolio.

Three important components of focusing on the long term when investing:

1. Compounding returns: One of the most powerful forces in investing is compound interest. Over time, the returns on our investments start generating their own returns, leading to exponential growth. This process takes time and patience to realize its full potential.
2. Market volatility: Markets are inherently volatile in the short term. Daily price fluctuations can be influenced by a myriad of factors, many of which are unpredictable. A long-term approach helps us avoid the pitfalls of reacting impulsively to short-term market movements.
3. Achieving personal goals: Our personal vision and goals often span many years, if not decades. Whether it’s funding retirement, buying a dream home or building a legacy, these objectives require sustained effort and a long-term commitment.

Avoid the Temptation of Day-to-Day Watching

In the current age of instant information, it’s easy to get caught up in the minute-by-minute movements of the market. However, this can be detrimental to our investment success. Here are three reasons why we should avoid the temptation of day-to-day watching:

1. It can lead to emotional decision making: Constantly monitoring the market can lead to emotional decision making. Fear and greed are powerful emotions that can cause us to make impulsive choices, often to our detriment.
2. It causes us to lose focus of our long-term goals: By keeping our focus on our long-term goals, we can maintain a clear sense of purpose and direction. This helps us stay disciplined and stick to our investment strategy, even during turbulent times.
3. It can reduce stress: Obsessing over daily market movements can be stressful and exhausting. By taking a step back and adopting a long-term perspective, we can reduce stress and maintain a healthier relationship with our investments.

Investing is about much more than just making money. It’s a means to achieve our personal vision and long-term goals. By adopting a long-term perspective and avoiding the temptation to watch the market day-to-day, we can navigate the complexities of investing with greater confidence and purpose.

Ultimately, the true value of investing lies in the fulfillment of our dreams and the realization of our aspirations.

Our team is your partner in helping you minimize taxes and expenses while meeting your near- and long-term goals.

As we approach another election, and the pace and quantity of news (aka noise) continues to increase, it is important to stay focused on what is truly important and on what we can control. We are here for you as always. Feel free to reach out to me personally, or to any of our team, with questions or whenever we may be of service.

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Randy Carver, CRPC^®, CDFA^®, is the president and founder of Carver Financial Services, Inc., and is also a registered principal with Raymond James Financial Services, Inc. Carver Financial Services, Inc., was established in 1990 with the vision of making people’s lives better — clients, team and community. With this mission, Carver Financial Services has grown to be one of the largest independent financial services offices in the country, managing $2.6 billion in assets for clients globally, as of March 2024. You can reach Randy directly at randy.carver@raymondjames.com and in the office at (440) 974-0808.

Any opinions are those of Randy Carver and not necessarily those of Raymond James. This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.