What should I do with my nest egg? It's the million dollar question for workers without pensions, even during times when the market is sanguine. In times like these, it's a question that can translate into sleepless nights for workers and retirees alike.
Scary stock market: What should investors do?
What should I do with my nest egg? It's a tough question to answer, especially when the market is topsy-turvy.
By kablog
There's reason for restless sleep. As predicted, the market opened sharply lower this morning. Minutes after opening, the Dow Jones Industrial Average is down 211 points as I write this.
My colleague Jennifer Bjorhus and I wrote a story about investor sentiment and what's next for the market in Sunday's paper. In it, retiree Ron Schuman said he was worried about his investments but after the market fell 512 points on Thursday, he wasn't about to sell all of his stocks, explaining: "It's one of those things that if it's not within your control, what can you do?"
I know where Ron is coming from, but investors aren't powerless either. My top three suggestions?
- Focus on what you can control day-to-day. That means your income, your spending and your saving. Check out my Sunday column on budgeting.
- Create an investment policy statement, which I first wrote about shortly after the market hit bottom in March 2009:
- An investment policy statement is essentially a road map for your money. "It's a grounding document that helps establish some discipline," said Nate Wenner, president of the Financial Planning Association of Minnesota.
- Bloomington-based CPA and Raymond James financial adviser Laura Kuntz describes it as "an expectation-setting document." It's a document you can hang onto for dear life on a bad day, instead of picking up the phone and yelling "sell" during an emotional moment.
- It also serves as a reminder that your focus should be on your own investment strategy, not your neighbor's.
- Read the entire column here.
- Stay informed. By that I don't mean gluing yourself to a live tweet of every stock market move or a TV tuned to talking heads. Pay attention to the news, read good investment commentary, and make your own opinions. Here are three good reads for investors today:
The NYT's Ron Lieber on the dangers of allowing your displeasure with American politicians to drive your portfolio decisions.
The Wall Street Journal's special section on investing in mutual funds, which includes an article on how to decide when to sell a once high-flying fund.
A USA Today story by their veteran money writers Sandra Block and John Waggoner that answers many of the questions average investors have about the markets and the S&Ps decision to downgrade the US's credit rating.
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kablog
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