Your money matters

Anxiety over the worsening economy keeps rising as mass layoffs continue, the future of the auto industry weighs on the market and retail shoppers brace for less-than-merry holiday sales.

The BN asked four area financial advisors on how to manage your money now. Each answered the same three questions regarding the safety of your money, your retirement and your investments (i.e., green stocks).

Colleen Etue

Financial Advisor,

Edward Jones

1. Your money: Is it safe?

Even though the (government) plan passed, the markets may still be volatile. To fight volatility, you need to diversify your holdings. Keep in mind, though, that diversification, by itself, cannot guarantee a profit or protect against a loss. These are challenging times for investors. But by diversifying your holdings and focusing on the long term, you can navigate through choppy financial waters.

2. Your retirement: Now what?

Every situation is different. It's critical to work with an advisor to help set goals, define your time horizon and identify risk tolerance. These directly impact how your assets are invested, how long until they're needed, and your investment objectives. As time passes, one or all of these things generally change. When they do change, adjustments can be made to help keep the emotion out of investing. For most investors, it's important to stay calm, stay invested, be patient and look for opportunities.

3. Stocks: What to invest in now

Certain publicly-traded companies are dedicated to the environment. They can certainly be part of a diversified portfolio, depending on the individual suitability for the investor. Quality investments of all kinds, as part of a balanced and diversified portfolio, are always good choices. Working with an advisor is the best way to determine what fits your specific situation.

Erik Gruber

Registered representative and investment

advisor representative, Lincoln Financial Advisors

1. Your money: Is it safe?

If an individual has cash in excess of $100,000 (FDIC insurance limit), they could have multiple accounts at different banks, each with a max of $100,000. The easier route is to have a CDAR (Certificate of Deposit Account Registry). This allows someone to hold CDs at multiple banks through their current bank. They actually hold the CDs with different institutions so each is insured up to 100,000 but they will have one statement and manage it through their current bank.

2. Your retirement: Now what?

Any portfolio really needs to be customized to a particular investor. This sounds obvious but it's amazing how often this really isn't the case. The focus should always involve, even in bull markets, a focus on risk management. There is much more to risk management than simply moving more of the portfolio to bonds. Where appropriate, investors can use products to build in a floor for a portion of their portfolio and "lock in" gains. Depending on the investor, they could also use certain alternative investments that are not correlated to stock and bond markets.

The biggest key in all of this is not to invest each account as if it's in a vacuum. Each should be coordinated with other accounts, tax issues, and the estate plan, at a minimum. The expense to design and build a comprehensive plan around investments, taxes, estate for an individual or family will pay exponential dividends over time. And it will drastically improve the probability for successful financial independence.

3. Stocks: What to invest in now

For many investors, it is still appropriate to have exposure to equities and almost all need to stay disciplined … "Green stocks" can be good choices but they won't provide a wonderful return simply because they're "green." Company fundamentals will still dictate how that stock does over the long term.

Kelly Kazmierski

Owner, Legacy Financial Services Group

1. Your money:

Is it safe?

We custody our assets with Schwab Institutional, the large bank utilized by many fee-only advisers in the world. Schwab has sound financials and didn't get wrapped up in the sub-prime mess to the extent that other banks did. As a result, our clients money market and core deposit dollars are safe. With the recent increase in FDIC insurance for core bank deposits, it is my belief that those types of assets are safe. I don't think how the accounts are held (joint, separate) really matters. Each account is insured. So, I could have 5 accounts worth $250,000 and I would be covered. We have a very complex financial system with many, many layers and levels. The likelihood of people showing up at a bank and not being able to get their dollars out is so small … I personally and professionally do not recommend running around town and hiding nuts like a squirrel. You can be purposeful about protecting your money without being irrational.

2. Your retirement: Now what?

Be purposeful about your retirement… Be disciplined in your efforts and make sure that you have a good adviser on your team. …If you are in retirement and the plan that you have established has suffered losses this year that are outside of your comfort zone or, are affecting your ability to live off those assets, this is a perfect time to reassess and reallocate. That doesn't mean sell out and hide in fear. It certainly doesn't mean sell low, wait for things to get better and buy back high. It means – take some time to learn about long term investing … The stock market, especially right now, is still the best place to experience long term growth.

3. Stocks: What to invest in now

Basic investing principles have always told me that once something becomes a trend, it is too late. You have to buy into these things as they are on the up if they are truly a trend. Tech stocks in the '90s are an example of that…Understanding a company's financial position, through research, can dictate whether it's a good buy or a bad buy … Buy green stocks because they fit the plan, not because you think they are going to be the next dot-com opportunity.

Jason P. Tank

Certified Financial Advisor, Front Street Investment Management LLC

1. Your money: Is it safe?

The risk of the complete failure of our financial system is over. The authorities have thrown their full weight behind our banking system. The Federal Reserve is doing what it is meant to do in this type of crisis. The confidence to lend on a short-term basis is clearly being restored globally. However, this restored confidence has little to do with the longer-term effects of the recession on consumers and businesses.

2. Your retirement: Now what?

If this recent bear market has cut into the bone of your retirement plan, which is true of many retirees, then you really should revisit things. Sticking your head in the sand and hoping for a full and speedy recovery may not make mathematical sense. Complacency should not be confused with patience. Now, if you're lucky enough to have 10 years to recover from your losses, know that it could take that long to earn it back.

3. Stocks: What to invest in now

It might be counter-intuitive right now, but aim for the solid and the mundane rather than clinging to the "over the long haul" mantra. We'd be wary of theme-based investing such as green stocks, water plays and Asian infrastructure growth. They may be valid, but identifying themes that are measured in decades is kind of like going rare bird watching with headphones on while walking on an active railroad track.

BN

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