When is it appropriate to adjust your investment objective? One thing is for sure; it is never when we are emotionally swept up by market exuberance, or conversely, when we are in the grips of widespread panic. Instead, our objectives should be driven solely by life events. These are marriage, divorce, the birth of a child, impending or actual retirement, the death of a spouse, a reduction of income, a financial windfall, or an upcoming financial need. This is only a partial list as the possibilities are limitless. Being human, we all feel the effects of greed and fear. If we didn’t, we would probably be suffering from a neurological disorder of some type. In all aspects of our lives we develop strategies to overcome our desires to act impulsively and ultimately to suffer regret. Anyone who has gone on a diet understands the importance of setting goals and adopting psychological strategies to increase the possibility of success. These might be avoiding crash diets, measuring and recording our calories, our weight, and so forth. Our financial plans are exactly the same. There are many high-calorie temptations calling to us. These are exasperated by television, radio, friends and neighbors, all of whom will try to get you to deviate from your plan. “Oh go on, it is Christmas, have another piece of pie.”
The only solution is to ask yourself if anything has changed in your life that would necessitate a plan update. If not, then don’t change anything. Keep your plan current and measure your success against your own goals. Having worked for decades with many successful people, we know that every family is unique and everyone’s goals are different, complex, and ever changing.