- September 23, 2008
- By Mark Kelly, Baptist Press
"When I was a pastor in Fort Lauderdale, we had just started a big capital campaign in the late '80s when Black Monday hit and the stock market fell over 22 percent in one day," O.S. Hawkins said. "That would be like the stock market dropping 2,500 points in one day today. But we got through that. We got through the '80s and '90s and the tech bubble and the dot.com issues and 9/11 the volatility in the oil and gold markets that we still see."
Investors who bail out of the stock market after a sharp downturn wind up missing out on the rebound that will help them recover their losses, Hawkins said.
"What happened last Wednesday, when the markets went down 500 points in one day, was people were panicking and a few got all out of the equity markets that afternoon," Hawkins said. "Well, Thursday and Friday the market went back up, and then to get back in, it's like having a double whammy."
A successful retirement savings strategy requires an investor to stay the course even when the stock market becomes volatile, Hawkins said.
Hawkins referred to a recent analysis that showed an investor who had parked his money in an index fund 20 years ago and left it there would have seen an annual increase of more than 12 percent. On the other hand, an investor who got jittery and moved his money every time the market sank, would have seen only a 3.7 percent annual average return because he missed the 50 best days of market performance.
Markets are cyclical, with both down times and up times, but over the long haul, they make money, Hawkins said. A long-term commitment to a diversified investment portfolio, like the ones Guidestone offers Southern Baptist church and denominational employees, limits the impact of a market downturn and allows investors to maximize the benefits of the stock market's money-making ability.
"Guidestone's strength and stability across these 90 years has helped us weather a lot of market storms," Hawkins told the group.
Hawkins encouraged the group to think of retirement planning like running a marathon. A runner needs to get a good start, set a pace and run it, be ready to kick up the pace near the end and then sprint the last few yards to the finish line.
"That's the way it is with retirement planning," Hawkins said. "You've got to get a good start. Then you determine your time horizon and set your pace. Then when your kids get grown and you don't have any more college bills, you got some expendable income, then you put the kick in there and maximize all your 403(b) and use other vehicles to do that. Then when you get near [retirement] you put as much as you can in there for tax purposes and save that way."
A look at the history of the stock market reveals there has never been a 10-year period in which investors who stayed the course failed to make money, Hawkins said. A wise investor plots a strategy that anticipates market turbulence and then lets his strategy work for him.
Many people, however, don't feel they have the investment knowledge to devise a strategy and then manage their investments, he added.
"This is one reason we launched the My Destination date-targeted funds last year," Hawkins said. "They balance your portfolio for you and when you get closer to retirement, when you don't have that time horizon, it makes things a lot more conservative and you're not in the equity markets as much. You just pick the date of your retirement, then let us do the driving for you."