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  • Writer's pictureSteve

It's Not That Bad

As the stock market continues to recover from the Coronavirus drop, I've been taking a look at, and updating, many client's financial plans.  I can't help but be satisfied by the robustness these plans have shown in the midst of the downturn. Indeed, many people without advisors seem to be panicking and wondering if they'll ever retire, or if already retired whether they'll run out of money.  However, those with financial plans already in place have seen only a minor fluctuation in probabilities of success - a few percentage points at most.  Of course, this makes sense as my financial planning software takes into account potential "bad years" in its Monte Carlo simulations long before those bad years ever happen.  Still, how reassuring it has been for clients to actually see a few bad months of returns come and their long-term financial plan be only slightly affected, if at all. 

     It's one of the reasons I believe so strongly in the value of financial planning.  Human beings have an inherently difficult time understanding long periods of time and large numbers - both of which are critical to creating and understanding a financial plan.  That's why I use software, to do the projections for me.  The software then places these results in a clearly understandable format which is much easier for us to understand.  So while the world can sometimes seem turbulent and scary, we find out that these fluctuations, when placed in the context of decades of time, really don't mean all that much.  

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