More good than bad: Long-term planning and investing

More good than bad

Long-term planning and investing

James Taylor CFP®, Wealth Counselor

I was driving in the car the other day with my six-year-old daughter Josalyn when she said to me, “Daddy, are there more good people in the world than bad?”

I said, “Yes, of course, there are.”

She said, “How do you know?”

I said, “because the world is a good place and we know there are more good people than bad because things get better all the time. If there were more bad people than good, then we would have a scary world.”

What she said next made me proud. She is wise beyond her years. She said, “so it’s like a scale, and more good people are doing good things than bad people doing bad things, and the good outweighs the bad.”

“Yes, exactly,” I said.

The conversation had my wheels turning. Being a financial planner, I thought about how this view applies to long-term planning and investing. Using past returns of the U.S. stock market as analogous to life, we can say there are slightly more positive days than negative return days. It’s almost a coin flip. If we zoom out a year, we have positive returns around two-thirds of the time. A five-year time frame gives us positive returns around 75 percent of the time, and at ten years our chances of positive returns are around 95 percent.

The return statistics made me think of life in general. We know that there will be bad days and even bad stretches. Loss of a job, death in the family, an illness, and so on. But if we look at our lives as a whole, there is almost always more good than bad. It’s when we become short-sighted and narrow-focused that the bad can send us into the abyss. We have to stay in the game of life and experience the ups and downs. If we do so, we will have a good chance of being rewarded with a rich and satisfying outcome.

James Taylor, CFP®

Wealth Counselor

James helps to oversee asset and portfolio management for Versant Capital Management’s clients, working to ensure that their financial plans are optimized to succeed.

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