Print
E-mail
Comment
Conservative investing the safer bet
By T.L. Hamilton
The turbulence in financial markets this week has elicited strong reactions from investors across the country and in Montgomery County, whether trading stocks or building nest eggs.
Nervous about the stability of financial institutions and the stock market, people are buying more safes to hold their liquid assets. Sales increased 50 percent for top safe manufacturer SentrySafe.
During the three months ending June 30, the latest period for which data is available, domestic bank deposits slipped by nearly $40 billion, according to federal data.
But Frank Cannon, financial advisor and owner of Guardian Assets LLC of Conroe, said it’s a little too late to react to what’s happened.
Since most 401(k) holders don’t manage their assets, he said, brokerage firms don’t tell them to sell when stocks are high.
“They just ride the bungee cord up and down,” Cannon said. “Before long you’re the one hanging at the bottom.”
What to do down there depends on an investor’s age.
Those under the age of 40 have no pressing reason to do anything about it, Cannon said.
“Stick it out,” he said. “You’d be selling low and you’ll take the beating of a lifetime on the return; and then when you try to go back in after things have improved you’ll be buying on the way up.”
But those with only a few years left before retirement have every reason to play defense.
Cannon said pre-retirees should be more conservative with their money and find something of high quality that will provide a lot of income without a loss or risk.
“Money markets are probably your safest position, especially if the firm has bought insurance so it’s insured up to $250,000,” he said. “Government bonds are still safe. At this point, everyone is running to anything that’s guaranteed by the government, like intermediate-term treasuries.
“Those would be a good, safe component to add to your portfolio.”
While Cannon said none of his clients have run out yet to buy safes, he said people approach investment and money management in their own unique ways.
“I have some who have been in CDs for the better part of a year,” he said. “We’ve made some good money for them over the last four years and we can get a CD at 4 or 5 percent for those who can’t stomach the risk right before retirement.”
As for trading, Cannon said, at today’s rock-bottom prices it’s time to buy, but go with a relatively safe company.
“Something like Johnson & Johnson would be somewhat defensive,” he said. “People will still use soaps, detergents and Band-aids regardless of what the market is doing.”
Such companies wouldn’t be as volatile as the energy market while still being very broad-based in scope.
Cannon warned against buying mutual funds so late in the year, as buyers would get sent a 1099 form to pay taxes on the fund’s profits previous to the purchase.
Above all, Cannon said, call the manager of your 401(k) before making any major decisions.
“A lot of people think they can’t get advice because it’s just a regular retirement plan, but that’s not true,” he said. “They should be able to answer your questions.”
Dow’s worst week ever
Dow Jones industrials fell 128 points Friday to end the market’s worst week on record in percentage and points.
Story and stocks summary, Page 7A
Nervous about the stability of financial institutions and the stock market, people are buying more safes to hold their liquid assets. Sales increased 50 percent for top safe manufacturer SentrySafe.
During the three months ending June 30, the latest period for which data is available, domestic bank deposits slipped by nearly $40 billion, according to federal data.
But Frank Cannon, financial advisor and owner of Guardian Assets LLC of Conroe, said it’s a little too late to react to what’s happened.
Since most 401(k) holders don’t manage their assets, he said, brokerage firms don’t tell them to sell when stocks are high.
“They just ride the bungee cord up and down,” Cannon said. “Before long you’re the one hanging at the bottom.”
What to do down there depends on an investor’s age.
Those under the age of 40 have no pressing reason to do anything about it, Cannon said.
“Stick it out,” he said. “You’d be selling low and you’ll take the beating of a lifetime on the return; and then when you try to go back in after things have improved you’ll be buying on the way up.”
But those with only a few years left before retirement have every reason to play defense.
Cannon said pre-retirees should be more conservative with their money and find something of high quality that will provide a lot of income without a loss or risk.
“Money markets are probably your safest position, especially if the firm has bought insurance so it’s insured up to $250,000,” he said. “Government bonds are still safe. At this point, everyone is running to anything that’s guaranteed by the government, like intermediate-term treasuries.
“Those would be a good, safe component to add to your portfolio.”
While Cannon said none of his clients have run out yet to buy safes, he said people approach investment and money management in their own unique ways.
“I have some who have been in CDs for the better part of a year,” he said. “We’ve made some good money for them over the last four years and we can get a CD at 4 or 5 percent for those who can’t stomach the risk right before retirement.”
As for trading, Cannon said, at today’s rock-bottom prices it’s time to buy, but go with a relatively safe company.
“Something like Johnson & Johnson would be somewhat defensive,” he said. “People will still use soaps, detergents and Band-aids regardless of what the market is doing.”
Such companies wouldn’t be as volatile as the energy market while still being very broad-based in scope.
Cannon warned against buying mutual funds so late in the year, as buyers would get sent a 1099 form to pay taxes on the fund’s profits previous to the purchase.
Above all, Cannon said, call the manager of your 401(k) before making any major decisions.
“A lot of people think they can’t get advice because it’s just a regular retirement plan, but that’s not true,” he said. “They should be able to answer your questions.”
Dow’s worst week ever
Dow Jones industrials fell 128 points Friday to end the market’s worst week on record in percentage and points.
Story and stocks summary, Page 7A
Submit a Comment
|
You must be logged in to post a comment.
|
Not yet a registered member?
Click here to become one. Comments to stories and articles on the Web site are not edited or pre-approved before appearing online. Readers posting comments are solely responsible for those comments. Comments must be germane to the story to which they apply. Online comments that are libelous, profane or personally attack another site participant can be reported as abuse using the link provided on each comment. Comments reported as abusive will be reviewed and may be removed from view, as will off-topic comments. BE CIVIL. Individuals continually posting abusive comments to the site may have their registrations revoked. |
