When evaluating investment performance, it's common to hear about the "average market return," often cited as 7 to 10 percent annually for the S&P 500. While this figure offers a general sense of long-term growth, it can be misleading. Markets rarely deliver this return consistently. For example, in 2008, the S&P 500 dropped nearly 38 percent, while in 2009 it rebounded with a gain of over 23 percent. More recently, 2022saw a decline of 18 percent, followed by gains of 26 percent in 2023 and 25percent in 2024. These swings are far from the average, and they highlight the importance of planning for variability not just relying on a single number.
This idea applies well beyond investing. Take the average temperature in Miamisburg, Ohio around 55 degrees Fahrenheit annually. That number does not reflect the reality of scorching summer days in the 90s or freezing winter mornings. Dressing for the average would leave you unprepared for the extremes. The same goes for budgeting. If your average grocery bill is six hundred dollars, but some months you spend four hundred and others eight hundred, planning around the average alone could leave you short when prices spike. In both cases, the average hides the real-world fluctuations that smart planning must account for.
As your advisor, my goal is to help you build a financial strategy that’s prepared for the full range of possibilities not just the theoretical average. By understanding the highs, the lows, and everything in between, we can create a portfolio and plan that’s resilient, realistic, and aligned with your long-term goals. Averages may offer a starting point, but your financial future deserves a deeper, more thoughtful approach.
Together, we can work to keep you on-track toward your financial goals.
Request a consultation to learn more.
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