Retirement investing: Four must-read predictions for 2015

Retirement investing is a decades-long game, so don't be distracted by short-term yearly predictions. In light of that, here are retirement predictions for 2015 that will actually be useful and insightful

Now is the time of the year when market pundits make their predictions. These include persuasive arguments about why XYZ stock will soar, or why ABC asset class will crash.

I find these predictions to be useless: The pundits end up either being wrong or lucky.

That’s because nobody can accurately predict the markets in the short-term on a consistent basis. If anyone could actually do that, they’d be so rich it would be a waste of time to tell anyone else how they did it.

In light of that, here are predictions for 2015 that will actually be useful and insightful:

Stock and bond markets will fluctuate

Undoubtedly, there will be a short-term period this year where the market will drop and it will make you feel sick to your stomach. There also will be a period where stocks go on a strong push upward and you will feel great.

Don’t let either of these events distract you from your long-term goals. Having to deal with these fluctuations is the reason investors who stick it out earn higher returns than cash.

Those who panic will have lower returns than those who don’t

Often, when the stock market drops, investors get nervous and sell to avoid any further declines. This strategy sounds reasonable except that usually around the time they sell, the market turns around.

Even if the market doesn’t immediately recover, these same investors fail to get back in when the rebound happens and miss out on the eventual recovery and beyond. Realize that selling out in a panic just replaces one stressful decision (“Should I sell??”) with another (“Should I buy back in??”).

Your neighbor/co-worker/in-law will tell you something useless about investing

There is a lot of noise out there that can cause you to lose focus on your goals and strategy. It’s inevitable that someone at some point will tell you about the genius move they made buying some stock or how they predicted the last market correction.

Don’t get lost in this; it means nothing to you and your situation. Remember, people enjoy talking about their successes, but not their failures. For every genius move made there are probably 10 foolish ones.

Those who regularly saved 15% or more of their income will be in good shape for retirement

The statistics on how unprepared people are for retirement are alarming. One way to improve your retirement prospects and build a reasonable nest egg is to start saving 15% of your gross income as soon as you can and for the rest of your career. The earlier you start, the better off you will be.