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Money Questions? Invest In Advice

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By RICHARD MULLINS

The Tampa Tribune

Published: September 20, 2008

Updated: 09/20/2008 12:11 am

With the upheaval convulsing Wall Street this week, many average investors have spent the last several days wondering what they should do with their 401(k)s, money market accounts and other important investments. To help guide readers as they review savings and investment portfolios this weekend, we interviewed Gary Stempinski, a financial adviser with Raymond James Financial in Tampa, for top things to keep in mind and questions to ask your financial adviser.

I lost a lot of money. Should I get out of the market?

Don't make a decision in a panic. Talk to an experienced financial planner about your long-term goals. Scan your investments for weak companies in serious financial problems. Consider selling that stock and chalk the loss up as a tax benefit. "There are opportunities that present themselves in times like this," Stempinski said. Evaluate current positions and consider that a down market can be a good buying opportunity in some specific cases.

The federal government actions are so confusing. What do I need to know?

It's complicated, but try to follow news of federal action. Basically, they're trying to take toxic mortgages out of banks and inject money into the market to stabilize the economy. Still, it can affect stocks of many companies individually.

I heard money markets were in trouble?

Some funds "broke the buck," and fell to less than a dollar-for-dollar value because they weren't backed by secure assets. "If you have $10,000 in one of those funds, and a short term need for cash, take $1,000 out, but then slowly take out the rest - not out all at once," Stempinski said.

How should my portfolio change, depending on my age?

Generally the older you are, the more conservative your investments should become, and the more they should provide income. Talk about age-based funds that automatically adjust holdings. But you should still understand their holdings.

What if the market keeps going down?

If you've very concerned, "ask how much pain you can handle now," Stempinski said. Talk about methods to limit losses. Talk about "dollar-cost-averaging," which can provide a way to buy stocks when they're cheap and provide long-term value. "If you go that route, just trickle your way in, not with both feet," Stempinski said.

What about holding my own company's stock?

As a rule of thumb, no stock should represent more than 15 percent of your total holdings. Five percent would represent a conservative stance. "A lot of people in Bear Sterns and Lehman held huge portions of their company's stock and they were wiped out," Stempinski said.

What if I need cash?

"For example, if $100,000 is all you have in a portfolio, I advise keeping at least 10 percent in cash at all times," Stempinski said. If you're concerned about getting laid off, or you're under economic stress, keep at least 25 to 35 percent in cash.

Reporter Richard Mullins can be reached at rmullins@tampatrib.com or (813) 259-7919.

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