The S&P 500, Federal Employee Retirement, and NASCAR
My dad loved to watch sports. Nothing made for a more perfect Saturday than a couple of college games on either side of the dial and a NASCAR race in between. It didn’t take a hometown team on the screen to make the outcome matter, just intense competition and cheering fans on the sidelines.
Oddly enough, we often look at the day-to-day movement of the S&P 500 in the same way. We see a winner when the index rises and a loser when it falls.
Tracking the S&P
Our desire to track the S&P’s, aka the stock market score of the top 500 companies, is understandable.
Many of us have retirement accounts, and a rising S&P means we feel richer and more confident, while a drop in the numbers can cause a little bit (or even a lot) of anxiety about the future.
Of course, most day-to-day movements of the S&P are about as important as lap number 73 in the Indianapolis 500. Not very important.
In reality, lap number 73 could be the beginning, middle, or end of a trend affecting the outcome of the race.
A major movement in the S&P could be the beginning of a bull market or a bear coming out of the woods. But in most cases, like most single laps at a NASCAR event, one day’s movement of the S&P has very little predictive meaning.
The important thing is the long-term performance. At the close of trading on December 6, 1975, the S&P 500 was $67.41. On December 3, 2014, it stood at $2067.45.
Obviously, making a decision to quit the race based on the performance of one lap or one bad day of index fluctuation would have been a tad hasty.
Top 5 Holdings in the S&P
As the top holding in the S&P, Apple is the largest publicly traded company in the world. Microsoft is second which is a role reversal from the past decade. Amazon is now fast on its heels along with Facebook and Google rounding out the top 5.
Retirement planning isn’t a race. It’s about never giving up and staying in the game, continuing to pay yourself by contributing as much as you can to your retirement savings.
So enjoy the sports and S&P highlights on the nightly news with a cold beverage and a bag of chips. But remember, the real highlight is the consistent participation in your retirement planning.
At Medallion Financial Group, we believe financial planning is about Family. We have been helping families invest in the future since 1987 through a holistic planning approach. We recognize there are a variety of needs when it comes to retirement planning, plan rollovers, annuities, college planning, life insurance options, and investment management. It is easy to get lost in a sea of choices. Our financial advisors help with the basics and beyond to enable our clients to get the education, advice and management they need to retire with confidence.
Our focus is twofold: first and foremost, we are fiduciary advisors. We stand against any violation of laws, values, and ethics. Second, we treat our clients as part of our family, not only those who call Maryland and Georgia home, but clients across the US who have benefited from our reputation of personal service, integrity, and expertise.
We strive to exceed client’s expectations – because we have high expectations of ourselves.