When it comes to investing one of the most critical distinctions is understanding the difference between short-term and long-term goals. Short-term goals are often about control—paying down debt, saving for a vacation, or building an emergency fund. These are specific, measurable, and typically require immediate action. On the other hand, long-term goals like retirement or financial independence require more direction. They demand patience, discipline, and a steady commitment to making consistent choices over time.
This difference becomes even more apparent when you consider how most people start investing for retirement with a long-term outlook, often taking on higher risks during their younger years. However, as retirement approaches, there’s a natural tendency to want more control over the portfolio to preserve wealth and generate income. This shift can lead to micromanaging investments—constantly checking account balances, making frequent trades, or reacting emotionally to market news. While understandable, this behaviour can derail even the best-laid plans if it’s not managed thoughtfully.
Sometimes, this micromanagement stems from not having a clear objective. When we meet with clients to review their financial projections annually or every other year, we often revisit the big picture. While portfolio returns are a part of that discussion, the true question is whether the overall plan—savings, spending, and investing—is on track to meet their retirement goals. Focusing too much on year-to-year performance or making changes on the fly due to short-term underperformance or outperformance can lead to poor outcomes. Instead, it’s critical to evaluate whether your investments are aligned with your retirement plan and long-term objectives.
So, how do you balance the need for control as you approach or enter retirement? The answer lies in recognizing what you can control—such as your behaviour, spending, and asset allocation—and directing your efforts toward maintaining a sustainable strategy that aligns with your goals.
As the saying goes, “a watched pot never boils.” Similarly, over-focusing on every small movement in your portfolio can make progress feel slow or even non-existent. Shifting your focus to the long-term allows you to see the bigger picture and trust that your efforts will bear fruit over time.
Why Micromanaging Feels Necessary (and How to Avoid It)
As people get closer to retirement, the stakes often feel higher. You’ve spent decades saving and investing, and now the focus shifts from growth to preservation and income generation. This transition naturally brings a heightened sense of responsibility and, often, anxiety about whether your financial plan will hold up.
Micromanagement tends to come from a few key fears:
- Fear of Running Out of Money: As retirement nears, concerns about longevity risk—outliving your savings—can lead to overreacting to short-term market fluctuations.
- Loss of Steady Income: Without a paycheck, it’s easy to feel like every dip in the market is directly cutting into your financial security.
- Comparisons to Benchmarks: Seeing specific benchmarks or regions (like U.S. markets) outperform can create doubt about whether your diversified strategy is working.
- Uncertainty About Market Conditions: Volatility can amplify the urge to intervene, especially during downturns.
However, micromanaging often leads to counterproductive decisions. Constantly tweaking your strategy, chasing performance, or reacting emotionally to headlines undermines the long-term focus necessary for retirement success. Instead of trying to control every outcome, the focus should be on creating a sustainable plan and trusting the process.
When to Reassess Your Strategy
While avoiding micromanagement is crucial, there are valid times when you need to reassess your investment strategy to ensure it aligns with your long-term goals. Here are three critical areas to evaluate:
- Performance in Context: If your portfolio has consistently underperformed for several years compared to your plan’s expected returns, it may signal a need to revisit your asset allocation or investment strategy. However, short-term deviations are normal and shouldn’t prompt immediate action unless they impact your overall trajectory.
- Ensuring you are using the right benchmark is equally important.
- Life Changes: Major life events, such as retiring earlier than expected, health challenges, or an inheritance, might necessitate adjustments to your financial plan. These events can shift your risk tolerance, income needs, or spending habits, requiring a realignment of your portfolio.
- Shifts in Risk Tolerance: As you move closer to or into retirement, your ability to weather volatility may decrease. This is a natural time to reassess whether your portfolio’s risk level still aligns with your goals and comfort level. Adjusting for greater stability doesn’t mean abandoning growth but finding the right Rules-Based Investing: Controlling What You Can
One way we manage the uncontrollable nature of markets is by implementing rules for buying and selling investments. These rules give us structure and help us avoid emotional decision-making during periods of market volatility. For example, we use predefined criteria for why we buy a particular company—such as strong fundamentals, growth potential, or alignment with long-term trends—and equally clear criteria for when we sell.
By focusing on the process rather than the immediate outcome, we maintain consistency and remove the temptation to react emotionally to short-term fluctuations. This approach ensures that we are directing our investment behaviour toward long-term success, even though we cannot control the exact timing of returns.
Behaviour Is Key
At the end of the day, one of the few things you can control as an investor is your behaviour. This includes:
- Sticking to your plan: Following a consistent strategy, whether the markets are up or down.
- Avoiding emotional decisions: Not letting fear or greed dictate your actions.
- Rebalancing as needed: Adjusting your portfolio periodically to stay aligned with your goals.
- Trusting the process: Recognizing that investing is a long-term endeavour, not a sprint.
By focusing on these behaviours, you direct your investments toward success, even if you can’t control every outcome along the way.
Trust the Process for Long-Term Success
Ultimately, successful investing is about finding the balance between control and direction. While it’s natural to want to manage every detail, the most impactful decisions often come from focusing on the bigger picture: aligning your strategy with your goals, staying disciplined during market fluctuations, and making adjustments only when they serve your long-term objectives.
By recognizing what you can control—your behaviour, savings, and spending—and trusting the process, you can navigate the uncertainties of the market with confidence. Remember, it’s not about reacting to every twist and turn but staying the course toward the financial future you’ve envisioned.
Written by Susyn Wagner, CIM®, FCSI®, CFP®, EPC, RIAC
Senior Wealth Advisor, Senior Portfolio Manager
