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Money Girl
093 MG Panic-Proof Your Investments
Building a portfolio with Fidelity Basket Profolios is kinda like making a sandwich. It's as simple as picking your stocks and ETFs, sort of like your meats and other topics. And managing it as one big juicy investment. That's pretty good. Learn more at Fidelity.com/baskets. Investing involves risks including risk of loss. Fidelity Brokers Services, LLC. Member NYSC SIPC. My dad works in B2B marketing. He came by my school for career day and said he was a big row as man. Then he told everyone how much he loved calculating his return on ad spend. My friends still laughing at me to this day. Not everyone gets B2B. But with LinkedIn, you'll be able to reach people who do. Get a $100 credit on your next ad campaign. Go to linkedin.com/results to claim your credit. That's linkedin.com/results. Terms and conditions apply. Linked in. The place to be. To be. Hello and welcome to Money Girls Quick and Dirty Tips for a richer life. I'm your host, Laura Adams. If you're scared to even look at the envelope that holds your latest investment account statement, this episode is for you. When the financial markets are down, the true nature of our risk tolerance is revealed. Whether you're a riverboat gambler or a stuffed the cash in the mattress kind of person, you've probably been wondering what changes, if any, you should be considering for your investments right now. The most important rule of investing is to get your emotions out of the process. Fear and greed are very powerful motivating forces that can destroy portfolios. In other words, don't panic. This is because panic leads to rash decisions that may turn out to be bad decisions. Just like there's a waiting period for buying a gun, consider imposing a waiting period on yourself before making any large-scale investment decisions. Unless you're a seasoned short-term trader, simply let your plan for any changes soak in for a day or two before you pull the trigger on them. Once you've done some deep breathing and exhaled out the panic, focus on what you can control. A majority of the factors in the economy that affect your portfolio are simply not under your control, so why worry about them? Mother Market is going to do what she sees fit. Your job is to observe what she does as calmly as possible, go with the flow, and react in the most rational way possible for your circumstances. If you're considering some changes to a 401(k) plan, for example, thoroughly research your options, most plans offer an online account access to participants. If you're not sure what funds you're buying with your contributions, get in there and take a look. You'll see your balance for each fund, the percentage return over different time periods, the amount of company matching you may have received, and a lot more. Depending on your specific plan, you may not have a huge selection of funds in which to invest. Employer-based plans may only offer a dozen or so mutual funds. There is usually some type of cash management fund that invests in safe instruments like U.S. Treasuries, CDs, and other government securities. If you're feeling really frazzled, reallocating your money to more conservative funds is a way to step off the market playing field. There's nothing wrong with preserving your money by staying on the sidelines until your growth fund options turn around. And if you choose to sell your non-retirement accounts and hold them in real cash until rose your times, some investment gurus would patch you on the back right now, although other experts would encourage you not to succumb to panic by selling low. But please remember that although you can easily sell and buy funds within your qualified retirement accounts, there are regulations that impose a steep 10% penalty for actually withdrawing your funds early. September is a great month for planning. 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Go to policygenius.com or click the link in the description to get your free life insurance quotes and see how much you can save. That's policygenius.com. With the Wells Fargo Active Cash Credit Card, you can earn unlimited 2% cash rewards on purchases you want and purchases you need. That means you earn 2% cash rewards on what you want, like season tickets to watch your favorite team, and 2% cash rewards on what you need, like paying for parking. That's the beauty of the Active Cash Credit Card. It's ready when you are, with unlimited 2% cash rewards. The Wells Fargo Active Cash Credit Card, that's real life ready. Terms apply. Learn more at Wells Fargo dot com slash Active Cash. We wear our work day by day, stitch by stitch. At Dickies, we believe work is what we're made of. So whether you're gearing up for a new project or looking to add some tried and true work where to your collection, remember that Dickies has been standing the test of time for a reason. Their work where isn't just about looking good. It's about performing under pressure and lasting through the toughest jobs. Head over to Dickies dot com and use the promo code Workware20 at checkout to save 20% on your purchase. It's the perfect time to experience the quality and reliability that has made Dickies a trusted name for over a century. It's important to keep up the habit of investing or simply saving if you prefer. If you're unhappy with the fun choices in your employer-based plan, let human resources know. They may have the ability to add additional requested funds to your plan menu that would make you feel more at ease. Don't forget about the benefits you may be receiving from company matching. If you're fortunate enough to receive a percentage match on your 401k contributions, it can easily offset some losses in your account. There is an advantage to being in a bear market. It's called dollar cost averaging. This means buying a fixed dollar amount of an investment on a regular schedule. If you're making a level contribution of $200 per month to a retirement account, for example, this is what you're actually doing. Your $200 investment buys more shares when their prices are low and fewer shares when prices rise. This buy and hold strategy allows you to accumulate shares that will boost your portfolio when bullish times return and prices of those shares rally. However, you still need to be picky about what you're buying, loading up on shares of a fundamentally bad stock or fund just because it's cheap doesn't make sense. There will be plenty of opportunities to buy solid stocks or funds that you may have thought were too expensive to own in the past. And speaking of bullish times, stay informed about the state of the market so when prices increase, you'll be ready to reallocate your money as best fits your circumstances. If you have a long time horizon for retirement, you'll want to consider getting back into good growth funds to maximize your returns. But if you have less than 10 years to go for retirement, are highly risk averse, or will need the funds in the short term, then staying in conservative options will be best for you. A smart portfolio always includes enough real cash, no matter where you keep it. I want to recommend that you shore up your emergency fund. Knowing you've got dollars in a safe place such as an FDIC insured bank will give you confidence and help reduce stress. Three to six months of living expenses should be your absolute minimum amount to have on hand as your own insurance policy against job loss or unexpected financial needs. It's said that knowledge is power. I do believe that gaining investment knowledge and staying on top of your portfolio can make you feel better because you feel more in control. That's easier said than done in bear markets, I know. But until the bulls are back in charge, if you feel the urge to panic, remember to act on what you can control and keep your long-term investment goals in sight. I'm glad you're listening. Go to quickanddirtytips.com for all my contact information or for a transcript of this show. Cha-ching! That's all for now. Courtesy of Money Girl, your guide to a richer life. Since everyone's situation is different, this podcast is for educational purposes only and is not intended to be a substitute for seeking personalized professional advice. [MUSIC] H5N1 Bird Flu is spreading in some animals. If you work with poultry, dairy cows, wild animals, or with raw unpasteurized milk, wear protective gear and take precautions. cdc.gov/birdflu, a message from CDC.