I’ve received a lot of calls over the past couple weeks from fear-stricken investors. They are tangibly shaken by the volatility in the markets and feel they need to “re-look” at their financial plans.
Obviously, when external things threaten the overall plan (like the US stock market giving back its gains for 2007 in 10 trading days), investors can review their financial plans with their advisor. But I have to say, I receive a lot fewer calls when the markets go up. People feel better when they read good things about the stock markets but that doesn’t mean that they are well-positioned in their financial planning.
Just because markets go up doesn’t mean your investments do, nor does it mean you are optimizing your appetite for risk. If you could get more return for assuming the same amount of risk, you’d do it, right?
My point here is that not only in volatile times (read, markets going down) should investors care about their overall financial profile. Eking a percentage point out more per year means a lot of money over investors’ lifetimes and this is true in good times as well as bad.
