By entering the less certain world of our capital markets, more than 50 million American investors have assumed higher risk in the hope of higher reward. Now, they must also assume greater personal responsibility. There is an unacceptably wide gap between financial knowledge and financial responsibilities. It becomes even more of an imperative if Social Security is privatized. Risk is an indispensable part of our capital markets.
Markets go up and markets go down.
Certainly, the last few months have reinforced this point. But, at least based on historical performance, investing over the long-term is relatively smart and safe. Investors need to understand the relationship between risk and return and the benefits of a diversified portfolio. This is a critical element of making suitable and sound investments at the right time in their lives. Simply put, managing risk has to be a key part of any plan to publicly invest Social Security.