I would say that JLP's example calculation shows just how important luck can be. You can see that a relatively short run of five years of bad luck would halve your potential retirement fund. Too bad if that dip happens right when you need it. But this assumes that all your money is in shares.

What will $566k buy you in the year 2035? Probably not twenty years plus worth of comfortable retirement. And how many people get a thirty-year run without a major financial shock to make them dip into their savings?

I'm not saying it's wrong to invest - my saved money is all invested, but I'm just saying you have to be realistic about the probable benefits.

The more effort you put into planning your investments, the more likely you are to avoid costly mistakes. You can never eliminate all bad luck, but you can anticipate some events based on their probability. The more cautious you are, the less likely that you'll be wiped out by bad luck, but ... the lower the risk, the lower the potential return.

So really, it's up to you how much (potential) luck is going to be involved.


John.