The Goal of Investing: Financial Security

Many investors measure their success by comparing their portfolio to the S&P 500 or some other market benchmark. But trying to beat the market is actually the wrong goal – and it can be a disastrous one. Consider 2008, when the S&P 500 lost 38.5%. If your portfolio fell only 30%, you technically “beat the market.” But that’s hardly cause for celebration. 

The real purpose of investing is financial security – the ability to send your children to college, retire comfortably and care for aging parents if needed. It’s not about comparing yourself to some index that has no relationship to your personal life or financial situation. 

This means your job as an investor is not to predict the market’s next move. It’s to align your investments with your goals, invest consistently over time and stay the course even when markets are volatile. Wealthy investors don’t gauge their success by the performance of a stock market index. They measure success by whether they’re making progress toward their own goals.