Thursday, January 24, 2008

Economizing, part 2

Hmm, I guess today is advice day on Forever Chic. Here's a useful tidbit from the SF Chronicle's article on how to survive a recession:

Monitor your investments. When the stock market is gyrating, it's tempting to sell stocks out of fear or buy them out of greed.

If you are long-term investor with a well-diversified portfolio and are comfortable with your allocation among stocks, bonds and short-term investments, there's no reason to be making any big changes.

If you are not comfortable, not diversified or need the money in the next year or two, take advantage of up days in the market to rebalance your portfolio.

Duly noted, in light of my handwringing on Tuesday.


lindsey kathlene said...

My Roth IRA had dropped as well - there's far less value in it than I have invested (it's 1 year old). But I think of it this way: the funds I've invested in are balanced mutual funds controlled by managers. They aren't individual company stocks (which can tank with no saving them). The mutual funds will eventually go up again, provided they're not real estate based. Meanwhile, I'm getting many more shares for the same monthly investment than I was getting before. When their value eventually rises again, I'm going to have tons of shares!

Anyhow, that's how I'm naively cheering myself up at the moment... :)

drwende said...

Your mutual funds consist of individual stocks (and possibly bonds and other asset classes), so what you're buying is some combination of (a) the fund's investment philosophy and (b) the manager's savvy. Different mutual funds perform dramatically differently, which is why it's prudent to know something about the funds you're choosing from.