In todays podcast I am going to examine how the S&P500 historically has performed after back to back years of 20% plus gains. We are going to look at an interesting recent story about retirement, wealth and contentment. I am going to share a couple of good financial habbits for you to consider as you kick off the new year. I want to share with you a few milestones we accomplished this year and I will give you the top episode downloads for Sound Retirment Radio for 2024. And finally I want to share with you what my crystal ball is showing regarding investing as we kick off 2025.
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Articles, Links & Resources:
The Motley Fool: The S&P 500 Is on Track to Do Something It Hasn’t Done Since 1999, and Here’s What It Could Mean for 2025
Celebrity Net Worth: Jim Carrey
Jim Carrey Clarifies Retirement Comments
Historical Returns of the S&P 500
How To Use Snapshots in the Retirement Budget Calculator
First Trust: S&P 500 approximately 70% positive 30% negative since 1926
Transcript:
445 Taking Stock and Gearing Up
Announcer: Welcome back America to Sound Retirement Radio, where we bring you concepts, ideas, and strategies designed to help you achieve clarity, confidence, and freedom as you prepare for and transition through retirement. And now, here is your host, Jason Parker.
Jason Parker: America, welcome back to another round of Sound Retirement Radio and welcome to 2025.
You’re listening to episode number 445. The title is Taking Stock and Gearing Up. But before we get into today’s show, I want to start out by renewing our mind. And I’ve got Galatians 5, uh, verses 22 and 23. But the fruit of the spirit is love, joy, peace, forbearance, kindness, goodness, faithfulness, gentleness, and self control.
Against such things, there is no law. Why should you stand on your left foot at midnight on New Year’s Eve? So you start the year off on the right foot. I was at my daughter’s basketball game the other night and someone threw a diet Coke and it hit me in the back of the head. Thankfully it didn’t hurt because it was a soft drink.
In today’s podcast, I’m going to examine how the S& P 500 historically has performed after back to back years of 20 percent plus gains, we’re going to look at an interesting recent story about retirement. Wealth and contentment. I’m going to share a couple of good financial habits for you to consider as we kick off the new year.
And I want to share with you a few milestones that we’ve accomplished this year. And I’m going to give you the top episode downloads for sound retirement radio for 2024. And finally, I want to share with you what my crystal ball is showing regarding investing as we kick off 2025. Remember, articles, links, and resources are available at soundretirementplanning.
com. Just click on episode number 445 for everything that we discuss in today’s show. As we close the chapter on 2024 and step into 2025, I just want to take a moment to express my heartfelt gratitude to all the incredible people that we’re connected to. Thank you for subscribing to Sound Retirement Radio.
We’re fortunate to have an incredibly supportive and encouraging audience. Your emails, podcast reviews, and kind words of encouragement mean so much to me and my team. And I truly appreciate each and every one of them. This year marked some exciting milestones. In 2024, we surpassed 2 million unique downloads of the podcast, a testament to the power of this amazing community.
As I’m assuming that this is a result of you sharing the show with your friends and family. On top of that, since inception, more than 6, 000 people have signed up for the retirement budget calculator. And I’m especially thankful to those of you who have trusted us to manage your investments through Parker Financial.
Our team continues to grow so that we can serve you well. for making 2024 a remarkable year. We’re working on some exciting developments for 2025, and I can’t wait to see what the future holds. So here’s to another year of growth, success, and more dad jokes. If you had a net worth of 180 million, would it be enough for you to feel financially secure?
Or would you be tempted to go back to work after you had retired? In April of 2022, Jim Carrey announced his intention to retire from acting, expressing a desire to focus on spiritual pursuits and painting. He shared, I have enough, I’ve done enough, I am enough. He also reportedly mentioned that he would only return to acting if angels bring him some sort of script that’s written in gold ink.
Late last year, at the premiere of a new Sonic the Hedgehog movie, where Carrey voices the character Dr. Robotnik, A reporter asked him about the retirement comments that he had made in 2023. Jim Carrey jokingly remarked, And you know, I bought a lot of stuff and I need the money, frankly. Well, Carrie’s comments may have been a joke.
It highlights an important truth. A high net worth and choosing retirement does not guarantee contentment. Through years of working with individuals planning for retirement, I’ve observed that financial contentment is less about the amount of money you’ve saved and more about your mindset and understanding of your spending, and it’s not uncommon for me to see people who retire because they have enough.
Only to realize that retirement was not all they thought it would be. And so they go back to work. Many people believe that if they just had a little more money, they would feel secure. But the reality is that having more does not necessarily mean you will be ready to retire. One of life’s challenges is finding the balance between striving for success and embracing contentment.
Being driven to achieve goals can be inspiring. And at the same time, while we desire contentment, we want to avoid using contentment as an excuse for complacency. Frankly, I think Jim Carrey is hilarious. He’s been given a real gift to make people laugh, and I’m glad that he’s decided to keep working, at least for now.
Here are a few quotes I think you’ll enjoy. Jim Carrey once said, I think everybody should get rich and famous and do everything they ever dreamed of so that they can see that it’s not the answer. Socrates said, he who is not contented with what he has would not be contented with what he would like to have.
Epictetus said, contentment comes not so much from great wealth as from few wants. Alfred Nobel said that contentment is the only real wealth. There’s an American proverb that says, A harvest of peace is produced from a seed of contentment. And then, of course, Philippians 4. 11 says, I am not saying this because I am in need.
For I have learned to be content whatever the circumstances. If you’ve learned to be content, I’d love it if you would visit soundretirementplanning. com and click on episode number 445. Then on the right hand column of the website, you’re going to see an orange button that says send a voice message to Jason.
Please share your thoughts on contentment and retirement with me, and if it’s okay, I’d like to share your thoughts with our audience. As the year comes to a close, I encourage you to take some time to assess your current financial position, and this is the perfect opportunity to update both your net worth and your budget.
In the retirement budget calculator, we’ve made this process easier with a feature called snapshots. Snapshots allow you to capture a moment in time and record how things look financially. You can record snapshots for both your budget and your net worth. And if you’ve been using this feature for a while, you can compare snapshots year over year.
For example, after a year like 2024, it can be insightful and even fun to see how your financial picture has changed since December of 2023. The calculator makes this comparison simple. Just click on the December 2023 row. Then, hit the little blue plus button next to December 2024 snapshot to create a side by side comparison.
And I’ll include a video in the show notes to show you how you can do this. Taking stock now can help you reflect on your progress and set the stage for financial success in 2025. If it was a good year for you and if your plan supports it, perhaps you’re going to consider taking that trip you’ve always dreamed of or making the purchase or making the gift that you’re considering.
As I look back, there were a few really timely podcasts I created for you last year. In August of 2024, there were two headlines capturing people’s attention. Fortune said Magnificent 7 stocks lose 600 billion in global sell off. And the Wall Street Journal had a headline that read, Big Tech Sell Off Slams NASDAQ Worst Day Since 2022.
In that podcast, we talked about market volatility and entry year declines being normal. At the time, the Russell 3000 Index was down 7. 6 percent from July 19th to August 6th. But it was still positive 9. 6 percent year to date. It’s easy to forget those market downturns, but people were starting to get nervous.
Some of you may have been thinking about selling and going to cash. If you’re interested, you can go back and listen to episode number 434. But as I write this, the Russell 3000 index is up more than 22 percent year to date. If you stayed invested, how much more do you have? By not letting mid year volatility or entry year declines derail your long term investment strategy.
I also recorded two podcasts about how political parties and presidential elections can influence the stock market. The first episode, number 420, How Do Presidents Impact the Stock Market, aired in November of 2023. The second, number 439, Investing Through Election Chaos, was released in October of 2024.
Looking back, it’s easy to forget how anxious people felt during those times and the market volatility that came with it. But if you tuned into those episodes, I hope they provided valuable insights that helped you stay confident and committed to your investment strategy. When you listen to Sound Retirement Radio, you’re gaining insights that can lead to greater financial confidence and clarity.
You’re receiving the data and context you need to make more informed decisions about your future. And if either of these episodes resonated with you last year and helped you to stay the course. Chances are you’re better off financially today than you were at the start of 2024. This reminds me of what coach Jim Wooden used to say.
He said, we become the average of the five people we surround ourselves with. The voices we choose to listen to, the people we spend time with, and the perspectives we allow to shape our thinking can have a profound impact, not just on our financial outcomes, but also on how we feel along the journey. So thank you for allowing me to be a part of this journey with you.
As an interesting side note, here are the top five podcast episodes for Sound Retirement Radio last year, based on the number of podcast downloads. The fifth most downloaded show of 2024 was number 429, unlock retirement confidence, the three numbers you must know. The fourth most downloaded show was number 432, Navigating Your Financial Future, A Comprehensive Guide to Managing Retirement Income.
The third most downloaded show was number 424, Finding Clarity, Your Roadmap to a Fulfilling Retirement. The second most downloaded show last year was number 421. Will the stock market crash in 2024? And the number one most downloaded show of 2024 was number 422, pursuing higher expected returns with Wes Krill, PhD.
As I wrap up this podcast, one of the most common questions we get this time of year is about our outlook for 2025. Especially after experiencing back to back years of over 20 percent gains in the S& P 500, which is far exceeding the historical average of around 10 percent annually. To answer this, I did some research to see how often the total return of the S& P 500 has had consecutive years with 20 percent plus gains since 1926, and then what typically happens in the third year after two strong years.
And here’s what the data reveals. In 1927, the market was up 37. 5%. In 1928, the market was up 43. 6%, and then in 1929, the market was negative 8. 4%. In 1942, the market was up 20%. In 1943, the market was up 25.9%. And then in 1944, the market was up 19.75%. And an interesting side note is that World War II was from 1939 to 1945.
So these were three really strong years of market performance during the midst of World War ii. In 1950, the market was up 31.71%. In 1951, the market was up 24. 02%, and then in 1952, the market was up 18. 37%. In 1982, the market was up 21. 4%. In 1983, the market was up 22. 56%, and then in 1984, the market was up 6.
27%. In 1995, The market was up 37. 58%. In 1996, the market was up 22. 96%. Then in 1997, the market was up 33. 36%. In 1998, the market was up 28. 58%. And in 1999, the market was up 21. 04%. Then in 2000, the market was down 9. 10%. So out of the six periods where the S& P 500 had 20 percent plus back to back returns, in four out of the six of those time periods, the market had a third year with positive returns.
And two of the six year periods had a third year with, that had a loss. So we could say historically, 67 percent of the time, the third year after two consecutive 20 percent years for the S& P 500 produced positive returns. And 33 percent of the time the market produced negative returns. Then in 2023, the market was up 26%.
And then in 2024, the market’s up over 25%. Well, past performance is no guarantee of future results. The concern that this can’t last, or this is too good to be true. is not exactly supported by the historical data. Some of the economic reasons we might see continued strength are falling inflation, falling interest rates, strong employment, the AI advancements, which will enhance productivity, and is so profound that many people are saying AI may be the greatest invention since electricity.
A new president and Congress who are considered by many to be business friendly and who have a track record of voting for low taxes, not to mention that the market performed really well during the last four years when Trump was president. With these economic and political tailwinds based on the historical data, it’s possible that we might experience positive returns in 2025, despite what all the naysayers are saying, despite what all the bad news bears are saying.
However, If history is our guide, we might also consider that the returns this year could be more modest compared to the past two years. One of the key takeaways from studying the S& P 500 over time is that about 70 percent of the time the market is up and about 30 percent of the time the market’s down.
Unfortunately, many people focus so much on trying to avoid the 30 percent of down years that they miss out on the 70 percent of the time the market produces positive returns. The key is to approach investing with a long term mindset. Think in decades, not days. It’s not about predicting what the market will do in the next 6 12 months.
It’s about planning for how different market returns will impact your specific retirement plan. Remember, the research shows us that it is time in the market, not timing the market, that will provide the greatest probability of success when it comes to investing. Volatility is normal. Corrections are normal.
Pullbacks are normal. Bear markets are painful, but they happen. We should expect to see a pullback or a correction in 2025 because entry year volatility is normal. It’s not the end of the world. And if you need to refresh on this idea, these concepts, you can go back and listen to episode number 434 titled managing expectations and embracing volatility.
For most of the people we work with, retirement is likely to last 20 to 30 years. So unless you know that you’re in the final years of retirement, The focus should remain on the longterm rather than the next six to 12 months. This time of year, people often ask me about my forecast and predictions for investing in the new year.
And I have to tell you, I believe in the resilience of businesses and the economy, because I have faith in the ingenuity and determination of mankind. Companies will continue to innovate, create, and deliver goods and services that improve our lives. And people invest in these businesses because we all want to share in the growth and prosperity of the economy.
Investing, in my view, is not a game, and it’s fundamentally different from gambling. It’s not about trying to time the market perfectly or jumping in and out. The real game is staying invested for as long as possible without tapping out. Some people say the system is rigged, and in a sense, it’s not.
They’re right. I believe it is rigged for success. It’s designed to win. Whenever the economy wobbles, the powers that be step in to stabilize it, support jobs, drive markets, inject money into the system, and incentivize success. People excel at innovation and leadership, consistently finding ways to build better solutions and improve upon existing ideas.
So yes, it’s rigged. It’s rigged to win. The key is to stay in the game and yes, there’s going to be pullbacks, corrections, bear markets, and periods of extreme uncertainty. But rather than trying to predict the future, it’s better to focus on planning that can help you stay on track and make course corrections as necessary, regardless of market fluctuations.
History has shown that staying invested for the longterm is one of the most effective ways to navigate short term volatility. Creating a bucket strategy at the onset of retirement can help you think of your money based on when you’re going to need it. By focusing on your timeline, goals, maintaining a disciplined, diversified investment strategy, keeping costs low, rebalancing, and with ongoing planning, you can approach 2025 with confidence.
I don’t want to sound Pollyannish and go around pretending like there’s no risks in the world. The world is full of risks and we should be grateful for risks because without risk, there would be no excess returns. Investments involve risk, including the potential loss of principle, but thoughtful and intelligent investing and comprehensive planning can help you stay resilient through the good times and the bad times.
So in summary, while past performance can give us some insights and guidance for the future, ultimately, it’s important to have a long term mindset when it comes to investing. Staying invested for the long haul and planning accordingly can help navigate through market fluctuations and uncertainties. And most importantly, remember that investing is not about trying to time the market perfectly or making short term predictions, but rather staying in the game for the long run.
With this approach and comprehensive financial planning, you can confidently face 2025 and beyond. So let’s stay focused on our goals and maintain a disciplined investment strategy to achieve financial success in the year to come.
Announcer: Thank you for tuning in to sound retirement radio for articles, links, and resources from today’s show.
Visit soundretirementplanning. com. If you enjoy the podcast, share it with a friend and give us a thumbs up. Five star review. Ready to kickstart your retirement planning? Head over to retirementbudgetcalculator. com. Need assistance with investment management? Explore our services at parker financial. net.
Information and opinions expressed here are believed to be accurate and complete. For general information only and should not be construed as specific tax, legal, or financial advice for any individual. and does not constitute a solicitation for any securities or insurance products. Please consult with your financial professional before taking action on anything discussed in this program.
Parker Financial, its representatives, or its affiliates have no liability for investment decisions or other actions taken or made by you based on the information provided in this program. All insurance related discussions are subject to the claims paying ability of the company. Investing involves risk.
Jason Parker is the president of Parker Financial, LLC, an independent fee based wealth management firm located at 9230 Bayshore Drive NW, Suite 201, Silverdale, WA. For additional information, call 360 337 2701 or visit us online at soundretirementplanning. com.
