YOUR INVESTMENT GOALS AND EXPECTATIONS

A major challenge for most people in investing is setting the right goals and expectations. Even the most educated and experienced investors often get this wrong. Without clear, realistic goals, you won’t succeed as an investor.

The process begins with self-awareness—understanding your emotions and attitudes toward investing. You need to know what kind of investor you are emotionally. The second part is educating yourself about the possibilities for investment returns. Once you know both yourself and the range of outcomes, you can set meaningful goals and expectations.

Knowing Yourself

To better understand yourself as an investor, ask these questions:

1. What is your tolerance for short-term losses?Some people can’t tolerate even small, temporary losses—for example, a 5% drop in three months. If that’s you, the stock market isn’t a good fit. Even bonds might feel risky, considering they lost 16% in 2022 and still haven’t fully recovered as of late 2025.

Others recognize that markets are volatile in the short term and are willing to accept even large losses (up to 40%) in exchange for long-term gains. Most people fall somewhere in between, accepting moderate short-term losses for the chance at higher long-term returns.

2. Are you a risk-taker or a speculator?Some investors are drawn to the idea of getting rich quickly. They want to bet big on the “next Amazon, Google, Apple, or Nvidia.” While this approach can pay off, it carries enormous risks.

Speculating—by concentrating heavily in one stock, cryptocurrency, or other high-risk asset—is closer to gambling than true investing. While you might double or triple your money, you could just as easily lose it all.

Speculation has no place in retirement accounts. You can gamble with money you can afford to lose, but not with the money you’ll depend on in retirement.

3. What do you consider good, excellent, or disappointing results?Many investors don’t have a clear idea of what typical returns look like. Before setting expectations, write down your own benchmarks. Ask yourself:

• What do I believe are average returns? (3%, 5%, 7%, 12%?)

• What would I consider good returns? (7%, 9%, 15%?)

• What would I consider excellent returns? (12%, 15%, 20%?)

• What would disappoint me? (6%, 3%, or even negative returns?)

Also, consider potential losses. How much could you tolerate losing during a market decline? Write that number down—it’s just as important as your return goals.

The Possible Outcomes

Your initial opinions matter but now let’s look at the typical range of actual results—your reality check.

• Average investor: about 5% per year.

• Above-average investor (with an advisor): about 7% per year.

• Very good investor: 9% or more per year. Some skilled do-it-yourself investors achieve 10–11% annually, even before getting higher returns from my system.

  
  

And what about the top professionals? Surprisingly, fewer than 1% of highly paid fund managers beat the S&P 500 consistently over the long run. In my own review of 9,000 funds, only 9 managers outperformed the index over a 20-year period.

While some managers shine for a year or two, very few sustain superior results over decades—the time frame that truly matters for retirement investors. If you’re 65, you need to plan for a 30-year horizon.

Yes, there are rare investing “superstars” who earn 20–30% annually for decades, but they run hedge funds for the ultra-wealthy and have access to opportunities the average investor doesn’t.

So ask yourself honestly: if 99.9% of professionals can’t consistently beat 10% annual returns, what are the odds that you—or your advisor—can?

Losses

Let’s now look at the possible losses that you could experience. 

The only thing that can’t lose money is a savings account or a Certificate of Deposit.  If the bank fails, you would still be covered by insurance up to a certain amount. 

Money market funds technically can post a short-term loss, but it is highly unlikely. Money market funds were underwater for a short period of time in the Financial Crisis of 2008, but they quickly returned to par value. 

Bonds can and do lose money in the short-term.  Bonds lost about 16% in 2022 and have yet to recover at the end of 2025.  If you own individual bonds and hold them to maturity, you will not lose money in the long run.

Losses in the stock market can be substantial. Stocks enter a bear market decline about every six years on average.  Over the last 25 years, the S&P 500 has posted losses of 55% in 2008, 48% in 2001, 34% in 2020 and 25% in 2022. Aggressive growth funds (tech funds) lost 77% in 2001.  Older investors simply cannot suffer these kinds of losses.

Time Horizon

One of the biggest mistakes investors make is judging results over the wrong time frame. Short-term performance (6 months, 1 year, even 3 years) is misleading. Any strategy can outperform—or underperform—temporarily.

A full market cycle averages about 7.5 years and includes:

• A bear market decline

• A steady growth cycle

• A volatile growth cycle

You need to know how your strategy performs across all three phases. That knowledge requires patience—far longer than a few months.

Conclusion

You’re now equipped to set intelligent investment goals and expectations. These should align with both your chosen strategy and your emotional comfort level.

You need to decide what you think your average annual returns will be on your investments and what your potential losses could be in bear markets. 

If you are conservative investor, you should expect returns between 3% and 5% and only small losses in bear markets.  If you are a typical investor that follows the standard industry advice, you should expect returns of around 6.5% and you should be prepared to experience losses of around 30%. If you are an aggressive investor, you could expect returns of 9% to 10% but you need to be prepared to suffer losses of 40% or more in an ugly bear market. 

These are not great tradeoffs.  Your choices are not that great.  That is why I developed my Better and Smarter investment system.  I spent years developing a system that can generate average annual returns 13% to 15% and that loses less than 10% in ugly bear markets.

My system is designed to deliver higher long-term returns while minimizing bear-market losses. It was built specifically for older investors who need growth to outpace inflation but can’t afford catastrophic drawdowns.

If you want to learn more about my system and how it can provide better results and peace of mind, click here to schedule a call.

Stay Disciplined My Friends,

Phil

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Disclaimers The Beyond Buy & Hold newsletter is published and provided for informational and entertainment purposes only. We are not advising, and will not advise you personally, concerning the nature, potential, value, or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. Beyond Buy & Hold recommends you consult a licensed or registered professional before making any investment decision.

Investing in the financial products discussed in the Newsletter involves risk. Trading in such securities can result in immediate and substantial losses of the capital invested. Past performance is not necessarily indicative of future results. Actual results will vary widely given a variety of factors such as experience, skill, risk mitigation practices, and market dynamics.