what is an average person with mutual fund investments suppose to do to protect their money before a recession
JUNE N asked:
What are some safeguards for an average person to take to protect their only assets? I heard one person say to put your money into CD’s until the recession is over? For me that would mean converting my mutual funds into CD’s. Is that good advice?
What are some safeguards for an average person to take to protect their only assets? I heard one person say to put your money into CD’s until the recession is over? For me that would mean converting my mutual funds into CD’s. Is that good advice?
engineer50:
Its a judgment call based on your assessment of the economy, your investment time horizon and your risk tolerance. Anyone investing in mutual funds should realize that markets do not always go up.
May 23, 2009, 4:47 amrpf5:
There are no guarantee’s in the stock market, even big investors have this worry nor can anyone guarantee that we will hit a recession either. Your guess is as good as any expert that claims to be able to see the future. It is that uncertainty that fuels the market & makes people rich. My guess is that the market runs in cycles & if l wait, my mutual fund will rebound & with it all the new stock l am buying at this lower price. l invested for the long run.
May 24, 2009, 12:11 pmYour plan with the CD’s could be good also especially if you are going to need the money in the near future. Now that rates are starting to come up they become a better deal.
Shaun R:
You could always take some of the money out and short some stocks. If a recession is coming you could make some good money this way.(way more than any cd)
Of course to do that you should learn some basics on the stock market and develope a system for trading.
This is a good website that can teach you the basics in the market and give you some good tips to developing a system.
May 25, 2009, 9:57 amStockTrdr:
There are several factors to your question, first and foremost being what are your time horizons. Historically those who pull their money out of investments and convert them to cash during a recession almost always loose or leave money on the table. They either waited too long (By the way its statistically impossible to time the market and do this perfectly) and the value has already dropped, and or they pull out with a dropped value and then miss the upswing as the market recovers. If you have the oppertunity to speak with a good financial advisor (someone who really watches the market) you could really take a look at what you are holding and hopefully get a good feel for your time horizon you MAY find that you are actually in a good defensive fund that will likely weather the storm just fine.
The long and the short of today’s market is that NOBODY knows what is going to happen next. If you set up your mutual funds through a reputable firm and you have a good advisor why not ask for a meeting and discuss your feelings and your needs over the next 5 years. The advisor can help you ensure that you are properly invested based on your needs and your ability to handle downswings.
On a side note, your statement about “What are some safeguards that an average person…” Don’t underestimate yourself you are recognizing that you have assets and that it could be potentially bad for you to have those assets loose value. Now the next step is to work with your advisor to determine how much free liquid cash you may be needing in the next couple of years and possibly taking that out of the mutual funds and placing them into a safer short term instrument. But pulling out all of your money is usually not a good idea, allow some of it to have the exposure to the pending upside of the recovery. (after things go down…they go up and you want to capture that)
May 26, 2009, 9:25 am