Business
Coping with the credit crunch: Experts answer your questions
Fort Worth/Tarrant County, Texas
The Star-Telegram asked a group of local financial planners and investment advisers to answer your questions on coping with the current ups and downs of the investment markets and the impact on your financial/retirement plans. The forum is closed to new questions, but please feel free to peruse their answers below.
THE PANELISTS:
Most Recently Answered Questions
Questions 31 - 34 of 34 (Page 2 of 2)Submitted by John Rost from Arlington, TX
Q: How will the bailout bill affect the "Efficient Markets" principal?
Answered 10/03/08 22:19:47 by Bryan Clintsman
A: As many know, the Efficient Market Hypothesis states that all publicy available information about a stock or bond is already embedded into the current trading price of that security. This has been a cornerstone of our Capitalist, free market economy since the beginning of our financial markets in the United States. Over the past 10-20 years, reporting and disclosure rules have been strengthened in an effort to provide more transparency to investors about the true value of a company they may be investing in. Specifically, a rule called Mark to Market has been required in recent years which requires a company to book a loss if securities they own have fallen in value - even if they have not yet sold that security. This accounting rule was required on a quarterly basis in an effort to provide potential investors with the ability to better determine the fair value of a company and its assets before investing. While the Efficient Market Hypothesis is still very much alive and well in our financial markets, one disappointing part of the bailout bill which was passed restated the SEC's authority to relax this Mark to Market accounting rule. This will provide companies with more leeway to determine the value of the underlying securities they own on their balance sheet. Translation: potential investors need to do even more research into the true value of a company before making investments in that company.Submitted by Gloria Sevick from Fort Worth, Texas
Q: I am wondering the same as Joyce Broyes only about my 401K account.
Answered 10/03/08 16:20:34 by Burk Rosenthal
A: I'm not sure if your question is specific to the employer itself or to the money market or the other possible investment options within the plan. However, if your employer were to suffer financial difficulty, you have protection provided by the Department of Labor. In other words, your employer could not legally use your retirement funds to pay off creditors. If you are referring to the actual investment options within the 401k, then that depends entirely on the choices you've made within the plan. If one of the fund companies within your 401k ran into financial difficulty they also could not use your funds. However, if all of the securities within your funds had problems that would be an entirely different story. The bottom line, I believe, would be to make entirely sure that your choices within your plan are in tune with your goals, time horizon, and comfort level.Submitted by RICK CAWTHRON from BENBROOK
Q: I have a 401k with jp morgan,They said I was balanced and diversified.They manage my portfolio.Should I just ride this out or request money move to safer grounds.i should not sell low.
Answered 10/03/08 15:18:16 by Scott Reasor
A: I believe it's advantageous for people to review their portfolio with their advisor's to ensure that their asset allocation meets their long term goals. If you and your advisor feel that a diversified balanced portfolio are aligned with your long term goals than stick with it. During times of uncertainity many investors make the mistake of getting out by trying to time the market. In essence investors are letting their short term emotions manage their portfolio and are ignoring their goals. History has shown that diversification, asset allocation, and periodically rebalancing your portfolio are the necessary tools to weather roller coaster rides like this one. This does not mean that the value of the portfolio will not go down, but it balances the risk and reward based on your long term goals.Submitted by Joyce Broyles from Arlington, Texas
Q: I wanted to ask opinion on my money market IRA rollover investment? Is it safe? Should I just leave it there, even though it is not making hardling anything, for right now, are would it be better to roll it to cd's or bonds investment. This was done recently after a 30 year marraige dissolved, it is my only retirement,and cannot afford to loose a penny.I am 60 years old, work p/t make min. income, only debt is that I oweis still 40,0000 on my home at a fair interest rate. Also, is a charles Schwab bank safe? They have a high yield checking account they are offering. Thank you so much for any help you may have to give me.
Answered 10/03/08 10:05:26 by Jim Lacamp
A: The Treasury has said that they will backstop money markets. That being said, they have not been clear on what the coverage amounts will be, or how their backstop will work. I would make sure that your balance is under the current FDIC limits, which are $100,000 for non-IRA's and $250,000 for IRA's. You might want to consider putting monies you don't need to live on in CD's which should offer you higher rates than money market.