Performance is your key to a secure retirement. Unless you are one of the lucky few, who does not need performance, you cannot achieve your goals with savings alone. You need performance because, once you achieve a critical mass of assets, it can have three or four times more impact than savings on the amount of money you accumulate for your retirement years.
The need for performance creates the need to take investment risk. You cannot achieve your financial goals by rolling CDs or burying your money in the back yard. And, the greater your need for performance the more risk you have to take to achieve that performance. Anyone who says he can produce high performance for low risk is a scam artist.
Some people do not need performance to accumulate additional assets. They have more money than they can possibly spend during their lifetimes. Because they do not need additional assets they do not need performance. Their tolerance for risk is extremely low. Their principal concern is preserving the value of current assets. Less than 1% of Americans are lucky enough to fall into this category.
The second luckiest type of American works for a company that provides a pension plan that guarantees retirement benefits for life. This type of plan is gradually becoming extinct, unless you work for the government. Fewer and fewer Americans benefit from this type of guaranteed benefit.
There is a second type of secure investor. They are on track to accumulate sufficient assets to retire when they want to, live the way they want to, and to be financially secure late in life when they need it the most. They are a prudent investors who use lower risk investment strategies to produce performance that gradually increases their retirement assets.
The majority of Americans do not fall into the wealthy or financially secure categories. They do not have sufficient assets to fund a secure, comfortable retirement. They are saving money, but they are extremely dependent on performance to help them achieve their financial goals. In fact, performance is critical because it produces more assets than savings.
In the good old days a person could retire, invest 100% of their assets in the bond market, and live happily every after. Rising longevity has changed this paradigm forever. Early retirees also need performance to offset the impact of distributions, investment expenses, and inflation (erodes the purchasing power of money).
At least 80% of Americans need performance to accumulate new assets or preserve the value of existing assets. This leads them to Wall Street's doorstep. Very few people have the time, knowledge, and interest to manage their own assets and produce their own performance. Who they delegate this work to will largely determine how successful they are.