Smart Planning Sessions: Investing Through Uncertainty and Planning for Early Retirement Abroad
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Is it safe to invest right now?
Elizabeth, have you been getting 2020 vibes recently? Like the whole world feels a little off?
I think off is a gentle way of putting it, Sean. Chaotic feels a little more befitting. 2020 felt chaotic and so does 2025.
Yeah, I'm with you there. Well, if anyone listening is worried about what the recent economic shakiness means for their investment plans, this episode, we've got some answers for you. Welcome to NerdWallet's Smart Money Podcast, where you send us your money questions and we answer them with the help of our genius nerds. I'm Sean Piles.
And I'm Elizabeth Ayola. This episode, we have the next installment in our Smart Planning series. And we're going to be joined by a listener and a guest financial expert to discuss whether to pull back on 401k contributions due to the current economic uncertainty.
But first, we're going to talk about whether it's safe to invest right now and if you should trust the market at all, given the way it's behaved over the last several weeks.
So, Sean, since you're Mr. Certified Financial Planner, what's your take on that?
Well, I'll remind you, Elizabeth, and everyone listening, that while I am a financial planner, I'm not your financial planner. So don't take this as personalized advice and don't get litigious if your investments don't perform like you want them to. But here is what I'm thinking. Investing remains most folks' best bet for staying ahead of inflation. as in the return you get on your investments is greater than the rate of inflation, typically. And because of that, I can't afford not to invest, regardless of what sort of wackiness is going on with the stock market or tariffs or the news of the day.
Listen, I can't afford not to invest either. But a lot of people out there are seeing the swings in the stock market and even changes in the bond market, which are supposed to be safer investments. And the value of the dollar is dropping. And they might be wondering if investing will continue to be a reliable way to grow your money.
Yeah, I feel that. And one thing to keep in mind is that there is never a guarantee that the money you put into an investment will grow. That's just the risk of investing. But over the long run, investing has been a reliable way to build wealth. The average return over the past 100 years has been 10% back during inflation and is closer to 7% or 8%. And last year, the S&P 500 was up over 20% and the Nasdaq was up almost 30%. Because of the banner year that we had in 2024, some analysts were saying that some stocks were overvalued and were due for a correction. It looks like that's part of what's happening right now. And I'm also seeing a lot of chatter about how, quote, this time feels different.
Maybe this is the period of market volatility that sends the whole system crashing down. And the folks saying that are right in a way. This time does feel different. We haven't seen this specific convergence of circumstances before. But here's the thing. Every time is different. No two market crashes or economic calamities are the same. And that can be really hard to reckon with because as humans, we like predictable patterns. When we see something unfamiliar or scary, it can lead us to act irrationally or make decisions from an emotionally heightened state.
Absolutely. But is it weird, Sean, that I get some peace even in the middle of the chaos in terms of knowing that at some point the market's going to correct itself and everything's going to be fine?
That's why the long view is important.
Exactly. OK, but let's get back to the point. So I agree and I get that every time is different. And I also think it's helpful to have that context around market performance. But is there anything about the recent turbulence in the stock market and bond market that makes you personally think that investors might want to consider shifting how they're investing?
Back in early April, we saw an interesting convergence of events. There was one week where the stock market was dropping while bond yields were going up and the dollar was going down. To avoid making a confusing situation even more difficult to follow, I'm going to spare everyone an in-depth recap of what all of that means. But here's the gist.
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Chapters
6 chapters
1
Is it safe to invest right now?
0:00–5:07
2
What is dollar-cost averaging and how can it help?
5:07–10:09
3
How to evaluate your risk tolerance and capacity?
10:09–15:13
4
What is the FIRE movement and how does it work?
15:13–16:07
5
Should you adjust your 401(k) contributions during uncertainty?
16:07–20:39
6
What are the implications of retiring abroad?
20:39–43:53
Speakers
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