Holberg Financial Blog

Dow(n) or Up? What 20,000 Actually Means

Posted by holbergfinancial on January 25, 2017

One of the largest and most tracked indexes in the entire world just smashed a major, life-altering, massive, tremendous huge milestone: the Dow passed 20,000 for the first time ever!

Jump out of your socks, high five your neighbor, and smile with joy knowing you're soon to be rich riding on the waves of the upswell of the economy...

False. Hold your horses (I don't have a horse, so I'll hold my coffee mug instead).

Does it really matter? Does the Dow crossing 20,000 actually mean anything to you?

Here is a quick breakdown of why it matters to you and why it doesn't:

It matters to you because when the stock market goes up, it is generally a positive sign that the economy is doing well. Consumer confidence is generally high and that means that people's investments (think 401k, IRA, stocks, etc) are moving in the upward direction. Cool, log on to your retirement account and hopefully you see some green plus signs indicating your investments are improving in value.

It matters in the long run for the value of your retirement account. Growth in the Dow (and the stock market more generally) hopefully mean that your retirement value is going up as well (if it isn't, it might be a good time to check in with us to make sure you are invested well: holbergfinancial.com for a free financial health check up).

It doesn't matter because your not a day trader, billion dollar portfolio manager, or in charge of million dollar financial transactions every minute (or more likely every second). For most "normal" peeps out there, the Dow going up and down in the short run doesn't really matter that much. What actually matters is making sure that you a) have the proper retirement accounts, b) are saving a healthy amount each month over a long period of time, and c) are invested in something appropriate given your account value - this could mean that ETFs or target date funds are appropriate.

It doesn't matter because whatever the Dow is today, it's not going to stay there in the long run so don't get too excited (or depressed) when you see fluctuations in the market or headlines on the evening news. You are going to fall asleep and wake up tomorrow and still be the same you regardless of the Dow.

All in all, America (and you) can pat yourself on the back for a cool numerical milestone at 20,000, but in all reality, your financial and life goals will be more tied to habits of regular, sustained savings than they will be to the numbers you see on your news apps or TV.

Financial health has more to do with your actions than external factors so make sure you're making positive and strong financial decisions each day rather than outsourcing on the hopes that your investments will be as bullish as the Dow.

We'd love to share more about how you can improve your financial health - waiting to do something sucks - so get a move on and schedule a free financial health check up with us today by visiting holbergfinancial.com.

PS we don't bite. We also don't sell or push financial products on you. We pride ourselves in being unbiased and fee only so you know exactly what's up.

Topics: Dow Jones, Index Funds, Investing, Retirement, Stock Market, Stocks, Wealth

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