It’s amazing how much technology has shrunk the world and intertwined us all. Technology has also helped create a global economy that has linked all of us together, for better or for worse. Things that happen thousands of miles away are known around the world almost instantly. As the world becomes smaller, the amount of information seems to be getting larger on a daily basis.
As we’ve witnessed lately in the financial markets, that’s not always a good thing. The turmoil in Greece spread around the globe instantly, and impacted markets across the globe to varying degrees. It’s why none of us can stick our heads in the sand when it comes to understanding our investments and how they impact our retirement plan. You have to think about things like how foreign markets could potentially impact your personal finances and it might be a good time to check your 401(k) plan to see if you selected a fund that invests in international markets.
Even if you are not directly investing in international markets, you may still feel the impact of them. For instance, you may have an investment in a company or fund that derives a significant amount of its revenue from international markets. An economic downturn internationally could cause a drop in the company’s value.
This is not about the pros or cons of investing in the international markets, but rather, it’s about the importance of knowing what you’re invested in and what type of risk exposure you have to volatile markets, foreign or domestic. If you’re not completely sure, perhaps it’s time to consult with a financial professional. A qualified financial professional has the tools to analyze how much risk your portfolio is exposed to, and after asking some questions, should be able to assess your personal risk tolerance as well.
Many financial professionals offer a complimentary meeting and portfolio review where they can assess your personal situation. Remember, Greece and other foreign markets may be thousands of miles away, but in today’s global marketplace, their problems might be much closer to your investments than you think.