About 2 years ago my family and i went on a Disney Cruise. The trip was amazing. However to get to the port in Miami we had to fly from Toronto to Miami and on the flight I felt a great resemblance to investing and market volatility.
First off let's begin we board the plane, luggage gets checked, the pilot updates us tells us the weather and for the most part is on autopilot all the way to Miami. Sometimes he tells us to buckle up other times he tells us to walk around.
The same job an airline pilot does is the same job a financial advisor does. A financial advisors job is like an airline pilot. His job is to get you to your destination safely. He doesn't control the weather, he didn't make the plane but it's the tool to help you take off, fly and land safely.
The taking off is like the beginning of investing. It takes a lot in the beginning to see the benefits of putting money aside to get in the air to your destination. The same is true when investing you start slowly, you build up momentum.
There were times on the flight to Miami we experienced turbulence, quite a bit and it made me scared. As we hit the turbulence I thought this is exactly what my clients feel when the market volatility hits. They get a little scared because we hit some bumps. The goal hasn't changed. We're still trying to get to Miami but we're hitting some bumps and the seat light sign is on. Isn't that exactly what market volatility is or the ups and downs of the market?
As we got to cruising altitude it was smooth sailing. Clear skies and the seat belt sign was removed. Same as markets are good everything is doing well.
Then as we descended to the ground we hit some more volatility. Buckle up. But it was only a short time of it.
Finally the landing. We can see the destination on the map, and we can see Miami. The pilot makes some tweaks to the route, announces the weather and Presto - we've arrived at our destination. We've arrived at our goal, be it retirement or kids education.
As we landed I knew I had always used this analogy but on the this flight it hit me. I used it because I found it through Don Connelly of www.donconnelly.com, a trainer to financial advisors but now experiencing it was totally different.
An advisor job is to get you to your destination safely. Just like a pilot. Along the way we are going to experience some turbulence but like the pilot he's don't this thousands of times and knows the route and knows his vehicle. There are times where the turbulence scared me but it didn't change the fact I was still going to Miami. The same in investing, market volatility may scare you but it doesn't change the fact that you're saving for retirement or kids education or a new house.
The vehicle the plane may change to help get you there faster or it may be newer but it doesn't matter as much as you think. Quality of it does. Same in investing the plane is like the mutual funds, or ETFs or stocks in your portfolio. The pilot didn't build the plane he is just the pilot and his job is to get you from in my case from Toronto to Miami safely.
The experience of turbulence is a great analogy to market volatility. It's the same thing and yes I got a little scared but I was still working towards my goal and trusted the path we were taking.