Wealth Education

Financial Headwinds For Today’s Investors

By June 15, 2023July 31st, 2023No Comments

Have you ever flown to Europe for vacation or business? If so, you probably remember the flight back to the U.S. took a bit longer.

A recent flight I took from London to Atlanta took two hours longer than flying from Atlanta to London. A two-hour difference in flight time is quite common in late fall and winter due to strong headwinds from the jet stream.

These winds can blow as strong as 200 mph from west to east in the northern hemisphere. The strength of those headwinds can really lengthen your westbound travel time. That’s why we pilots plan our route and fuel loads with these winds in mind.

When planning for wealth accumulation and retirement, people need to understand their finances will encounter headwinds. As a financial advisor and pilot, I wanted to give you the top headwinds your finances will encounter — and maybe a few tailwinds to watch for, as well.

A simple acronym to remember the headwinds by is TILES.


Benjamin Franklin is quoted as saying, “In this world, nothing is certain except death and taxes.” It’s crucial to know how much you pay in taxes. You want the best advice possible when attempting to reduce the tax impact on your finances.

A proactive accountant working hand in hand with your financial advisor can make a world of difference. Too often we hear clients say their conversations with their tax professional are limited to how much they made and how many expenses or deductions they have. Ideally, impactful tax planning with a focus on tax reduction should happen before the end of every year.

Some planning practices create a 10% or more savings on state tax requirements, while other, more sophisticated strategies have an impact on both federal and state. Have your financial advisor and accountant talk early Q4 to discuss tax planning for the year. The amount you save in taxes can accumulate and compound over time to a meaningful amount.


The Oxford Dictionary defines inflation as “a general increase in prices in an economy and consequent fall in the purchasing value of money.” That means as the price for goods and services goes up, the purchasing power of the economy goes down.

Do you remember how much it cost 15 years ago to go to the movies? According to the U.S. Bureau of Labor Statistics, prices of admission to movies, theaters, and concerts in 2019 were 39.69% higher than in 2004. That means prices for movies, theaters, and concerts experienced an average inflation rate of 2.25% per year.

Inflation is an unavoidable headwind for every current and future retiree. A good financial plan will run a variety of simulations to determine the impact of inflation on future income. You should make an effort to have your investments stay ahead of inflation to ensure your future retirement lifestyle can be maintained. A healthy mix of stocks, bonds, real estate, commodities, and precious metals will help minimize the headwind of inflation and optimize future buying power.


In wealth accumulation and retirement planning, avoiding or minimizing the headwind of loss is directly tied to your risk tolerance. It’s crucial for your advisors to have a good understanding of your risk tolerance. Your ability to take on financial portfolio risk comes from a variety of factors, including your age, personality type, size of portfolio, and willingness to stomach loss.

Many people are familiar with target mutual funds that change equity exposure to the fund based on the target year. These funds can be a great place to start, but they only consider the number of years until retirement when determining equity exposure. I personally know 40-year-old conservative investors and 75-year-old aggressive investors, so age is only one of many factors to consider.

No one is ever happy about seeing their account value decrease, but if that decrease makes you want to sell out, then your portfolio is not constructed to your risk appetite. Build your portfolio based on your ability to handle the headwind of loss.


The headwind of investment expenses and fees can vary greatly depending upon your investment vehicle, advisor group, and amount of service provided. Consider this example from the U.S. Securities and Exchange Commission:

“If you invested $10,000 in a product with a 10% annual return before expenses and annual operating expenses of 1.5%, after 20 years you would have about $49,725. But if the investment had expenses of 0.5%, you would end up with $60,858 — an 18% difference.”

It’s important to consider fees from the context of investment return, knowing that just because a fund or investment strategy is cheaper doesn’t make it better. Nor is the opposite true. The measurement should center around the investment return “net-of-fees” to determine if active management minimizes the headwind.

Sequence of Returns

Timing is everything. A sequence of negative returns at the start of retirement can create a headwind in your finances that may be difficult to overcome. Sequence of returns is the order in which you receive returns in your portfolio, and “there is a danger that the timing of withdrawals from a retirement account will damage the investor’s overall return or ability to last throughout retirement.”

Of course, we would all like to retire at the start of an extended bull market, but this is not under an investor’s control. Work with your investment advisor to create protections on portions of your portfolio and plan for the worst-case scenarios.

Professional pilots are required to train annually in simulators to sharpen their skills and test their abilities in high-stress environments. Similar simulations or modeling should be done on every investor as they approach the retirement red zone (the five years leading up to retirement).

There are many more headwinds investors can face as they navigate the wealth accumulation and retirement years. Use your team of professionals to help you find ways to minimize the financial headwinds.

The best way to create a tailwind in your finances is to start the wealth accumulation process as early as possible. Benjamin Franklin had something to say about this process as well: “Money makes money. And the money that money makes makes money.”

Dave Mirolli

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