As you approach retirement, the journey can feel both exciting and daunting. At Fortress Financial Group, we understand that financial planning for retirement is filled with uncertainties and questions. Many people hesitate to ask questions they feel might be too basic or embarrassing. However, we believe the only bad question is the one left unasked. Our goal is to help you feel confident in your financial decisions by providing clear and straightforward answers to the questions you're afraid to ask.

Understanding Financial Market Indices

When listening to financial news, you might often hear terms like the Dow, S&P 500, and NASDAQ. But what do these terms mean, and how do they affect your retirement planning?

The Dow Jones Industrial Average (DJIA)

This index tracks 30 of the most prominent companies in the United States. It's a narrower indicator than other indices but remains highly influential because it includes well-known companies. The DJIA gives a snapshot of the market's overall performance, though it doesn't encompass the entire economy.

History and Returns: The Dow was created by Charles Dow in 1896 and initially included 12 companies. Over the long term, the Dow has provided an average annual return of about 7% since its inception, but in the most recent decade has seen a higher average, at 8.97%1.

The S&P 500

This index measures the performance of 500 large companies listed on American stock exchanges. It's a broader market indicator compared to the DJIA, providing a better overall picture of economic health.

History and Returns: Introduced in 1957 by Standard & Poor's, the S&P 500 is often seen as a benchmark for the overall U.S. stock market. Historically, it has averaged annual returns of around 10%2.

The NASDAQ Composite

Known for its focus on technology companies, this index includes nearly all the stocks listed on the NASDAQ stock exchange. It's heavily influenced by tech giants, making it a key barometer for the technology sector.

History and Returns: Launched in 1971, the NASDAQ Composite has grown significantly due to the tech boom, averaging annual returns of approximately 9-10% over the past few decades3.

The Russell 3000

This lesser-known index represents nearly the entire U.S. stock market, including 3,000 of the largest publicly held companies. It's a comprehensive indicator of the market's overall performance.

History and Returns: Introduced in 1984, the Russell 3000 provides a broad measure of the entire U.S. stock market. It has averaged annual returns similar to those of the S&P 500, around 10%4.

Why Are These Indices Important for Retirement Planning?

Understanding these indices can help you make informed decisions about your retirement investments. Here are a few reasons why:

• Diverse Representation: Indices like the S&P 500 and Russell 3000 provide a broad view of the market, helping you understand the general economic trends that could impact your retirement savings.

• Sector Insights: The NASDAQ Composite, for example, can give you insights into the technology sector, which might influence your investment strategy if you're heavily invested in tech stocks.

• Performance Tracking: These indices allow you to track the performance of different market segments over time, helping you adjust your portfolio to align with your retirement goals.

Why Consult a Financial Planner?

As you plan for retirement, having a knowledgeable partner by your side is essential. A financial planner or financial advisor can provide personalized advice tailored to your unique situation. At Fortress Financial Group, our advisors in Rochester, Minnesota, are fee-only fiduciaries, meaning we are committed to acting in your best interest. We provide unbiased advice and transparent fee structures to help you achieve financial security.

Next Steps

If you have more questions about retirement planning or the financial markets, don't hesitate to contact us at Fortress Financial Group. We are here to ensure you feel confident and informed as you prepare for this significant milestone. Visit our website at fortressfg.net to learn more and schedule a consultation with one of our experienced financial advisors.

Disclosures

Fortress Financial Group LLC (“FFG") is a registered investment advisor. Advisory services are only offered to clients or prospective clients where FFG and its representatives are properly licensed or exempt from licensure. For additional information, please visit our website at https://fortressfg.net/. For current FFG information, please visit the Investment Adviser Public Disclosure website at www.adviserinfo.sec.gov by searching with FFG’s CRD# 315329. All investing involves risk including loss of principal.  

References

¹ Dow Jones Industrial Average History. Retrieved from https://www.slickcharts.com/dowjones/returns

² Historical Returns of the S&P 500. Retrieved from https://www.investopedia.com/terms/s/sp500

³ NASDAQ Composite Returns. Retrieved from https://www.investopedia.com/terms/n/nasdaqcompositeindex.asp

⁴ Russell 3000 Index. Retrieved from https://www.investopedia.com/terms/r/russell_1000index.asp