-=PCTechTalk=- Re: offtopic,mutual fund questions

From: "Don" <dsw32952@xxxxxxxxx>
To: <pctechtalk@xxxxxxxxxxxxx>
Date: Sun, 1 Feb 2009 20:11:21 -0800
Without knowing more about what investments a person has I can not even 
suggest whether you should suspend investing, continue investing or bail 
out.  I bailed out in late August or Sept after my portfolio had dropped 
about 15%  I sold all equities except a Precious metal and mining fund and 
put it into a money market account.  Since then my portfolio would have 
dropped another 30% or so but instead has only dropped about 5%.  I now have 
about 40% cash, 10% equities and 50% bonds.

I bailed out because I lost about 50% in the tech bubble bursting thanks to 
Fidelity and First Command Financial Advisors.  I could not afford to do 
that again.  I am only 2.5 years away from retirement at age 62 and do not 
have the resources to resume investing again right now.  I will probably 
start shifting cash back into equities in late spring or early summer 2009.

My decision was right for me.  It might be wrong for you.  Do your homework.

Much of what else I would have to say is dependent upon too many variables 
to be able to properly address every thing.  Some of these variables include 
age, investment horizon, financial goals and proximity to achieving them, 
risk tolerance  and many more.

Here are some general ideas:

If you have an employer match to your 401k or 403b investment plan invest at 
least enough to get the full match.  It is free money.  Don't turn it down.

Any investable money left should go into a Roth IRA unless you need the tax 
deduction of a traditional IRA.  Max this out if possible.  Then max out any 
other tax deferred account.

Investing in taxable accounts should be a last resort and should be used for 
long term equity investments to minimize the tax hit on capital gains. 
Index funds are perfect for this.

Buy low.  Sell high.  To achieve this, accumulate and maintain at least 3 to 
6 months living expenses in liquid assets such as money market funds or 
short term CDs.  This will help avoid the need to sell investments at a loss 
when you need the cash.

No matter how old you are you will always need some equity (stocks) 
investments to help cover inflation and maintain standard of living.

Always buy no-load funds. Look for the lowest expense ratios.  Vanguard is 
best on both points.

Annuities are expensive as sin.  Look at other alternatives before you buy 
into one.  And get an independent second opinion.

"Investment horizon" is the point in time when you no longer need to depend 
on your investments.    Typically, this will be at or near the end of your 
life expectancy.  It is not necessarily your retirement age.

Buy bonds and other regular income investments in a ROTH IRA or ROTH 401k 
whenever possible, then in other IRAs or retirement accounts that defers 
taxes.

Do your homework!  If necessary find an independent fee-based financial 
advisor to help.  The cost will be well worth it, and is tax deductible in 
some cases.  Cost will likely range up to about $300-$500 initially and 
around $100-$200 for annual reviews.  Cost will vary depending on what you 
want from the advisor and how independent he is.  Advisors that get paid by 
commission based on what you buy and how much you buy are not independent.

Diversify.  Don't put all of your eggs in one basket.  Gains on one "egg" 
will help cover losses on another.  Know your risk aversity level.  The 
closer to retirement you are the higher that level will likely be.

Buy low.  Sell high.  That is the cardinal rule.  Unfortunately, too many 
investors panic on a market drop when they should be seeing an opportunity.

Dollar Cost Averaging works!  Regular periodic investments over a long term 
can make you rich.

DISCLAIMER:  I am NOT a financial advisor.  The above is informational only 
and should not be construed as advice or instruction to purchase any 
particular investment vehicle.  Nor should it be construed as any form of a 
promise or guarantee of  profit or gain.  Any investment will vary in price 
and your investments may lose value and result in a loss when sold.

Visit these sites for additional infomation:

www.vanguard.com
www.morningstar.com
www.diehards.org  Check out the forums! (URL may have changed but no 
Internet access as I write this to check)

Google these:

risk aversity calculator
dollar cost averaging
mutual fund expense ratio
index fund
investment horizon
retirement financial calculator
asset allocation
prospectus


Don

----- Original Message ----- 
From: "Sandi Beach" <sandib2@xxxxxxxxx>
To: <pctechtalk@xxxxxxxxxxxxx>
Sent: Saturday, January 31, 2009 12:47 PM
Subject: -=PCTechTalk=- Re: offtopic,mutual fund questions


> Cristy, like you we have been standing pat but with considerable fear and
> trepidation!  I would also be interested in what Don has to say.
> Sandi
> ----- Original Message ----- 
> From: "cristy" <poppy0206@xxxxxxxxxxxxx>
> To: <pctechtalk@xxxxxxxxxxxxx>
> Sent: Saturday, January 31, 2009 11:44 AM
> Subject: -=PCTechTalk=- Re: offtopic,mutual fund questions
>
>
>> Hi Don,
>>
>> Just have been getting shaky about whether to continue mine or not, I
>> guess
>> everyone is now.  For now I have been sticking to it but things have
>> looked
>> grim for quite awhile to me.  I have a 403b . maybe email you offlist if
>> that is ok.
>>
>> thanks
>>
>> christy
>>
> 
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-=PCTechTalk=- Re: offtopic,mutual fund questions

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