September 17, 2008 • June Walbert
The current financial crisis has shaken up investors. Folks are concerned about their savings, investments and even their insurance coverage. Investors have struggled to save and now see account values declining.
Here are some tips:
*Don't Panic. If you sell on a down day, your portfolio could take a bath – a blood bath. It is likely best to swallow hard and hang onto your well-diversified portfolio. Remember investing is for the long term. By following panic sellers over the cliff, investors could compound the problem as aggressive selling drives prices down.
*Trust your fund managers. While they don’t have a crystal ball, allow them to make the tough calls as to whether it makes sense to eliminate or add particular stocks or sectors to your FUNDS. That’s why you hired them.
*Don’t time the market. Ten thousand dollars invested in the S&P500 in 1928 would have been worth over $800,000 at the end of 2006. Missing just the best 10 days over that same period would have cost a cool $500,000. Timing the market can cost you big.*
*Re-assess your tolerance for risk. A volatile market can serve to give investors a peek at their true risk profile. While now may not the time to sell, new monies could be invested in a more conservative manner including CDs, bond funds and cash.
*Source: “Black Swans and Market Timing: How Not to Generate Alpha,” Javier Estrada
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June Walbert is a CERTIFIED FINANCIAL PLANNER TM practitioner with USAA Financial Planning Services, one of the USAA family of companies.
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I have a concern. With our country in a financial crisis should I worry about my TSP funds? I have my funds setup in the L2040, and I have been watching the market value for it deminish. What would be my advantage? Wait out the depression and bank on the lower market value or pull my funds out of L2040 and invest in something more conservative, G-Fund?
Respectively
Wahliby
Posted by: Wahliby | October 04, 2008 at 04:57 AM