Newspaper Article

HOW TO COPE WITH PLUNGING STOCKS

VIRGINIA BREEN With Amy Feldman and Erica Garcia

1998

Overview

That's what is inside the envelopes from the brokerage firms and mutual funds showing jaw-dropping third-quarter numbers for the billions invested in 401(k)s and retirement plans. After being spoiled by an extended bull market, in which it seemed that all investors had to do was sit back and watch their money grow, workers across the city are finding out what it's like to have their investments clobbered, thanks to the world economic crisis and the severe selloff in stocks. Marjorie Newman, a 37-year-old nurse at Montefiore Hospital, added, \"Even though it'll be about 30 years before I can afford to retire, you can't help but wonder if there's going to be anything left. I can't get it now, though, so there's nothing I can do.\"

• Publisher: Tribune Publishing Company, LLC
• Subject: Graphic Not Available Electronically / Graphic Not Available Electronically CONVERT YOUR REGULAR IRA TO A ROTH IRA Contributions To A Traditional IRA Are Made Pre-tax, And Are Taxed Along With The Gains When You Withdraw The Money At Retirement Age. Contributions To A Roth IRA, On The Other Hand, Are Not Tax- Deductible But The Withdrawals Are Tax-free. If You Think The Stock Market Is Low Now, The Advantage Of Converting Your IRA To A Roth IRA Is That You Pay Taxes Now But Your Account Is Then Forever Tax Free. As With Most Everything In Life, There Are Certain Restrictions. THE GOOD, THE BAD, THE UGLY OF INVESTING The Bull Market Drove Portfolios To Astronomical Heights Over The Past Five Years. Here's How $10,000 Invested Five Years Ago Would Have Fared With These Rates Of Return. The Charts Show Where The Investment Began, Its High-point And Yesterday's Close. DOW JONES NASDAQ FIDELITY MAGELLAN AMERICAN EUROPACIFIC GR. PIMCO TOTAL RETURN / Graphic Not Available Electronically INVESTMENT STRATEGIES FROM THE EXPERTS Financial Planners Say You Should Make Your Investment Decisions Based On How Quickly You Need The Money. 1 YEAR OR LESS If You Need The Money Quickly For Retirement, For A New Home, For A New Child You Probably Want To Completely Stay Away From The Volatile Stock Market. Also Be Careful That You Don't Invest In Mutual Funds That Have Penalties For Short-term Withdrawals, Or In CDs That Charge For Taking Money Out Early. Though The Returns Are Low In Money Market Accounts, You Can Sleep At Night: You Don't Have To Worry About Losing Money Because Returns Are Guaranteed. 1-5 YEARS If You Need The Money In One To Five Years, You Could Put A Portion Of Your Money Into Stocks, Perhaps 25%. To Balance The Risk Of The Volatile Stock Market, You Could Invest The Rest In Short-term Bonds Or Bond Funds, Or Municipal Bonds, Which Offer Additional Tax Benefits. 5-10 YEARS If You Have A 5-to-10-year Time Horizon, You Could Put More Money In Stocks, Perhaps Half. The Bond Portion Of Your Investments Can Go In Intermediate-term Bonds Or Bond Funds, Which Offer Higher Returns Than The Shorter-term Bonds. 10 + YEARS If You Have At Least 10 Years, You Should Put More Money Into Stocks Even In The Current Volatile Market. While Few Of Them Suggest Investing 100% In Stocks, Over The Long Term Stocks Have Historically Outperformed All Other Investments. DON'T JUST SIT THERE Here Are Three Ideas To Improve Your Financial Picture In These Perilous Times: Mortgage Interest Rates Are At Three-decade Lows, With A 30-year Loan Running About 6.625%, And A 15-year Loan Running About 6.25%. If You're Paying More Than That, You Can Realize Substantial Savings Every Month By Refinancing. Here's How Much You'd Save Per Month On A $100,000 Loan For Every Percentage Point Cut In Your Interest Rate: GRAPHIC: 30 Year Mortgage SAVE $67 15-year Mortgage SAVE $55 REPAY YOUR HIGH-RATE CREDIT CARD DEBT WITH A HOME-EQUITY LOAN Homeowners Who Have Good Credit Records And Equity In Their Houses Can Get Home-equity Loans Between 8% And 9%, Well Below Credit Cards With Rates As High As 18% Or More. While There Are Lower-rate Credit Cards, Home-equity Loans Have The Advantage Of Tax-deductible Interest Payments Unlike Credit Card Interest. Here's About How Much You Could Save In A Year By Paying Off $5,000 In Credit Card Debt With Money From A Home-equity Loan: GRAPHIC: Credit Card SAVE $475 / Mike Gallo AGE: 28 HOMETOWN: Bensonhurst OCCUPATION: Stock Trader SALARY: Between $40,000 And $60,000 INVESTMENTS: 20% Of Annual Salary The Last Five Years In An S&P 500 Index Fund QUOTE: "I've Got My Money In Safe, Big Blue-chip Companies, But I Took A Major Hit This Quarter I'm Not Panicking, Though. If I Had To Bail Out Now, I Wouldn't Lose Money Really, Because I Had Such A Phenomenal Year Last Year. But Let Me Tell You, It Really Stinks. I Guess Things Were Too Good To Be True." If Mike Invested $10,000 In His S&P 500 Index Fund Five Years Ago, Here's How He Woul Dhave Fared At The Fund's Peak Performance And How Much That Initial Investment Would Be Worth Today. S&P 500