Where are you putting your money????

[Pennylane]

Let me just start by saying I know very little about the stock market and my DH probably knows even less. That being said, I know there was a big shake up yesterday. We have quite a bit of money in mutual funds right now. With a possible recession on the way, are you leaving your money in stocks or mutual funds? I really feel the urge to pull everything out and invest in CD'S. I guess I just feel like that would be safer.

Any help, insight or advice is appreciated!!

Ann

[SnuggleBuggles]

We are keeping our money in our diversified 401K. The money is going to be there a long time. If I needed the $ sooner then I would be tempted to pull it but as a long term investment I think we will just ride it out and hope that everything goes back up. (I heard that advice on NPR, btw :))

Beth

[brittone2]

With interest rates falling, CDs won't be gaining much interest at all.

We try to ride out the waves in the market. It isn't easy though.

Our 401Ks are pretty diversified. We've lost in some of them, but we also have some emerging markets funds that invest abroad. That has helped balance out our fund since the markets abroad have been a bit better.

[Moneypenny]

Since we don't need our money soon, we are not doing much with it. I think DH was going to do a little tweaking of our portfolio today and buy more stocks (which is something we needed to do anyway since we got a little out of balance and I had almost everything in safe, but low-earning accounts because I am about as risk-aversive as a person can get). Since we don't need the money for 30 years or so, we have plenty of time to ride this out. I will say, though, that this is the kind of situation that leaves me telling DH to make the moves and then not show me the statements for a while because I can't stand to see any losses.

[Momof3Labs]

Unless you need the money soon, your best bet is to leave it where it is!! Otherwise, you are selling when stocks are at a low, and when you want to buy again, they will be much higher. That is the single worst investment strategy to adopt.

Simple example: say, you bought your mutual funds 5 years ago when stock prices were $100. Today they are $80, and you sell. You just lost $20.

Now, you put your $80 in a CD, which earns virtually nothing, relative to inflation, so I am assuming that you have the same $80 to invest in 2 years when stocks have risen again to $120. You prepare to buy again.

Problem is, you only have $80. Stocks are $120. Had you left your money in stocks, you'd have $120.

Now, let's twist things up a bit. Pretend that stocks fall even further this summer, to $60. As long as you don't sell, you haven't lost any money (in fact, that's the time to BUY instead - it's a sale on the stock market)!! Just leave your money there until stocks go up again, and you get to keep all that gain.

Of course, the hardest part is knowing when stocks have hit their low or when they are about to go up. Even the experts don't do very well predicting this (which is why I love index funds vs. actively managed funds). But you don't need to know this if you are investing long-term. Just keep on investing using your same strategy as before, and it all works out to your advantage at the end (google "dollar cost averaging" to read how well this relatively mindless strategy works).

I hope that makes sense!

[Piglet]

Um, thanks to this board... in car seats, strollers, carriers, diaper bags and HA, LOL!

[khm]

If you pull your money out now, you are only guaranteeing a loss. When the market rebounds, you'll be kicking yourself. Hard.

My husband hates logging in and seeing everything down, but it is just part of the market and we accept that. You must, must, must be able to take the lows and the highs. If you can't, you need to adjust which mutual funds you choose. Pick more steady ones, your gains AND your losses will be more level. Since we are long term investors, we do pick more volatile choices, but we've accepted that we have to stomach the lows to reap the highs.

If we'd have pulled our money out last time the market was low, we'd have LOST the $30K we were down, PLUS the gains that we've made above and beyond the the rebounded $30K.

Keep momof3labs quote as your mantra -
Unless you need the money soon, your best bet is to leave it where it is!! Otherwise, you are selling when stocks are at a low, and when you want to buy again, they will be much higher. That is the single worst investment strategy to adopt.

[vonfirmath]

Let me just start by saying I know very little about the stock market and my DH probably knows even less. That being said, I know there was a big shake up yesterday. We have quite a bit of money in mutual funds right now. With a possible recession on the way, are you leaving your money in stocks or mutual funds? I really feel the urge to pull everything out and invest in CD'S. I guess I just feel like that would be safer.

Any help, insight or advice is appreciated!!

Ann

WHen the market is down is a Great time to put money into the market. You can buy more. Note: CD rates are going down too. 3.5% range is what I am seeing right now.

We have money in mutual funds. Since it is there for the long haul, I am not going to pull it out just because it is losing money on paper. If I had money in individual stocks in a company I did not trust, then I would take it out and put it in mutual funds instead.

Also if you need the money in the near future (2-3 years. Some people say 5 years) it should not be in the stock market. Pull it out and put it somewhere safer.

[Pennylane]

Thanks everyone. Reading all the posts makes me feel a little better. I guess I just feel like if our money is in a CD, it may not be earning much but we aren't really losing much. I really need to start doing some reading on these things so I am more informed. We have a really nice personal banker but I feel like she has the banks interest at heart first and foremost. My dh has left all the financial stuff up to me and sometimes I just feel overwhelmed.

I'll leave it where it is and hope for the best!

Ann

[brittone2]

Thanks everyone. Reading all the posts makes me feel a little better. I guess I just feel like if our money is in a CD, it may not be earning much but we aren't really losing much. I really need to start doing some reading on these things so I am more informed. We have a really nice personal banker but I feel like she has the banks interest at heart first and foremost. My dh has left all the financial stuff up to me and sometimes I just feel overwhelmed.

I'll leave it where it is and hope for the best!

Ann

You might want to consider meeting w/ an independent financial planner. They don't earn commissions in most cases, but instead give advice for an upfront set fee. I know early in our marriage we were at Merrill, and our advisor there seemed to always be pressing us to move something around, most likely to make a commission (and pushing certain products for commission).

You are more likely to get unbiased advice on how to best distribute your assets for your individual situation through an independent CFP, IMO.

[Pennylane]

You might want to consider meeting w/ an independent financial planner. They don't earn commissions in most cases, but instead give advice for an upfront set fee. I know early in our marriage we were at Merrill, and our advisor there seemed to always be pressing us to move something around, most likely to make a commission (and pushing certain products for commission).

You are more likely to get unbiased advice on how to best distribute your assets for your individual situation through an independent CFP, IMO.

I'm glad you mentioned that. I had the best intentions of doing that a year or two ago and it just never happened. I am putting it back on my "to do" list! I did call one lady and she wanted $5,000 to sit and work out a plan for us. Is that the norm?

How do you go about finding one ?

Ann

[brittone2]

nak-
maybe look for someone that will work hourly so you can work it into your budget (assuming 5K in one shot seems a little steep to you!).

here's an article that might help:

http://www.msnbc.msn.com/id/4886587/

[erosenst]

Momof3Labs has great advice.


Let me just start by saying I know very little about the stock market and my DH probably knows even less.

Given the above, you should avoid individual stocks. It's hard to be diversified enough, and the swings can be even larger than a mutual fund. Another option besides mutual funds are ETF's (exchange traded funds - you can Google if you're interested).

The question of whether to stay with your personal banker, or hire a financial planner, is a tough one IMHO. I managed my/our investments for a long time, but it got to the point where I wasn't spending enough time or paying enough attention. We now use a broker, who has done very well for us - and even with his fee, he's exceeded the market over the past five years. Many brokers/personal bankers will not be able to say the same. Are you able to evaluate how yours has done? And do you generally like him/her and the advice you receive?

For many people, however, having a fee-based financial planner makes much more sense. They have no incentive to have you actively/frequently trading mutual funds, and no incentive to sell you the product of the day. Because my DH owns his own business, and we have some other complications, we just finished the search for a financial planner to help us with some things. (Wanted someone to review our insurance needs/coverage, make sure our wills and trusts work and are up to date, help with buy/sell agreements for his businesses, etc.)

We started by asking friends who THEY use; in addition, DH got called by a fin'l planner. (Someone recommended that the FP call DH.) We then learned that, because of our relationship with our broker, we had access to a "free" financial planner. (We pay through our relationship with the broker.)

We spoke to all three, and it was pretty clear to us who we wanted. The two "non-free" planners quoted $3750 and $7000 - obviously, quite a range. Arguably, the more expensive one provided a broader range of services. I'm also know that our needs/complexity are on the very high side of average, if not above average.

Oh - one other thing that was important to me was that the financial planner NOT be affiliated with a particular brokerage or insurance company - I wanted a neutral approach.

Not sure that any of this helps - but thought it might be interesting to see how we approached it. Feel free to PM me if you have more questions.

Emily

[Momof3Labs]

I guess I just feel like if our money is in a CD, it may not be earning much but we aren't really losing much.

But, see, that's 100% wrong thinking.

Right now, you have paper losses. If you do nothing, your stock funds (with a rare few exceptions, but that's for your advisor to discuss with you), will rebound and you'll get your money back. All of it. It might take 2-3 years, it might take 5-8 years. Those losses are NOT real unless you sell your stock funds.

If you sell your stock and realize all of those losses, then invest in CDs at near-inflation rates, you'll have nothing more than what you have right now (after all those losses) in 5-8 years. So, yes, you are losing a lot by selling your stock funds now and buying CDs. And you'll never, ever truly get that money back.

But if you move to CDs you're also insulating yourself against any additional losses - that's the part that feels safe to you, but it ignores the fact that the market will eventually rebound, and you need to stay in the market to get back your paper losses.

I'm assuming that your investments are your retirement funds (or other funds that you don't need for another 10-15 or more years). If they are funds that you plan to use in the next few years, say to buy a house, then things are a lot more complicated and you really need to turn to your advisor for help. Or if your investments are in individual stocks, that's another story, too, as individual stocks do not always rebound. But the market, historically, has always rebounded, and I truly believe that it will continue to do so.

[C99]

Thanks everyone. Reading all the posts makes me feel a little better. I guess I just feel like if our money is in a CD, it may not be earning much but we aren't really losing much.

You could try a money market fund. I also recommend reading Personal Finance for Dummies for help on this stuff.

[vonfirmath]

You could try a money market fund. I also recommend reading Personal Finance for Dummies for help on this stuff.

Our Money Market account makes less interest than a CD.

[kijip]

Right where it is right now.

[KBecks]

We are sticking to our regular patchwork kind of plan. That said, I've got a lot of cash piled up in my Roth IRA and in the boys' education account that I've been procrastinating about getting into an investment. I need to get an hour or two (Ok, I should have done this instead of researching play kitchens) to decide how much and where to put some money. The boys' education fund is in a stock based Vanguard target retirement account aimed at the college dates and I would look at index mutual funds for myself, and maybe a solid american stock like J&J. However, I have little time to follow the market so right now I prefer low cost mutual funds. We need to look at our asset allocation too and that's partly why I'm OK holding cash for some balance so we're not 100% stock.

We started buying individual stocks in 1999 (poor timing) and have a lot of money in individual stocks, which frankly is not great. I do not have time to watch the stocks and so we're just rolling with it. I would like to sell out some of the stocks and go back toward more index or retirement based mutual funds, but then I have a decision about selling and its tough when you're talking about significant amounts of your own money. I believe owning individual stocks and doing it well is a part time job and you either need to spend the time yourself or you need to hire an advisor. That said, I am reluctant to hire an advisor because I have trust issues and am concerned about fees.