Stocks and Investing
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So we all know the economy is more or less in disarray. And if you keep up with business news, you also know that the $700 billion “bailout” is going to only make things worse for the economy. So everyone is more or less looking out for themselves now.
So you’re asking yourself “well if this $700 billion bailout is going to hurt us, what’s the point of it?” It’s to give a quick stamina boost to insurance and investment firms in the stock market. What does this mean to you? Well, if you don’t already have money invested in the market, now is the time to do so. Stocks are at all time lows with some of the biggest firms on the cheap. I personally recommend investing in AIG tomorrow as this “bailout” injection is going to really rally the price of the stock.
If there are any “experts” or investment personnel out there that would like to give an opinion or advice on this, please feel free to do so!
One Comment
Mike
October 6th, 2008
at 5:24am
I am NOT a financial adviser but here is what I do. I invest the bulk of my dollars into Index funds with a few actively managed funds that have low costs and low turnover. I also adjusted my 401k to ONLY use 4 index funds–large, small, mid, and international index funds. If you are in the govt and use TSP–dump everything into the C fund and THEN re-balance. If you need details buy Ric Edelman’s book as he explains why this technique works in retirement accounts. For those who need an adviser…only use a fee-based one…don’t listen to a broker who has an agenda or needs to sell certain stocks or mutual funds. If you are paying more than 80 basis points in expense ratios for any fund…you are paying too much. If you don’t believe me, just compare index fund holdings to those of active;y managed mutual funds which are charging you 1.5% or more in expenses. If you really want some excellent information try these web sites. http://www.fundadvice.com and http://www.ifa.com — both have objective information and the fund advice web site offers a radio program downloadable as an MP3..those guys are excellent and you cannot get any more objective advice. Neither tries to sell you on anything and Merriman-Berkman fundadvice.com) even offers a free consultation by phone/email which I took advantage of and was pleasantly surprise–no hard sell and they gave me some great advice on how to tweak my portfolio.
Bottom line: expenses DO matter so keep those low and stick with a company like Vanguard which offers low cost index funds and you’ll do fine. Remember, a bear market is an opportunity to buy fund shares cheaply especially if you dollar cost average each month. Don’t sell all of your equities and move them to cash thinking you are safe and you’ll just wait out the bear market…you will definitely lock in your losses for real and you will certainly miss the next up-swing of the market…
For those with 20 or 30 years or more until retirement–keep buying equities and don’t panic…you have plenty of time to recover. For those near or in retirement hopefully you re-balanced your portfolio long before this bear market and added more fixed income to offset losses. Remember, bonds in your portfolio simply lessen your losses in times like these…I use the simple rule that equities are for long term growth and bonds are simply a balancing mechanism included to match your risk tolerance.
good luck.