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There is a lot of talk about what people should be doing
with their investments during this deep recession. 401Ks and
savings have dropped by one-third to one-half for the
majority of people. Most advice centers around traditional
"wait and hold" strategies, figuring that when the market
goes back up, you will regain lost portfolio value. Sell now
and you lock in your losses, according to conventional
wisdom. THIS IS DANGEROUS ADVICE FOR BABY BOOMERS!
First, there is no guarantee that the stock market is going
to get well in the near future. You've heard commentators
and government officials taking about a bottoming out this
Fall, followed by a gradual recovery. This is pure
speculation and perhaps wishful thinking. There are reports
emerging that FHA loan defaults are now exceeding subprime
defaults - another wave of foreclosures is on the horizon.
And no one is talking about the potential for massive
personal bankruptcies from credit card defaults over the
coming year. What do you think out-of-work people have been
living on?!
Baby Boomers don't have time to wait for a recovery that
will likely take years to happen. And even then, don't
expect the market to rise to the lofty levels seen in the
past. If you sit there and passively watch your savings
dwindle with each monthly statement, you may lose another
fifty percent or so before the bottom is reached.
All the articles I've read and commentaries I've watched
avoid the mentioning the Baby Boomer generation. The sad
fact is that we are quietly being written off. Our home
equity is gone or greatly diminished. Our savings are being
savaged. The outlook is not good, and the only advice we are
receiving from the financial community is to be prepared to
work longer...way longer.
Don't expect your investment firm - T. Rowe Price, BofA,
whomever - to notify you with a recommended strategy for
Baby Boomers. You are the last thing on their minds right
now, somewhere way below their next bailout or executive
retreat.
GET MAD! if you still have some savings, take immediate
action. Review your portfolio yourself using tools provided
by your investment firm or independent sites like
SmartMoney.com. If you own stocks or mutual funds that
performed badly over the past year and continue to lose
value every month, SELL THEM! If your portfolio contains
stocks from commercial financial institutions, SELL THEM!
GET OUT NOW! Remember what happened to WaMu investors and
all the other recent examples. Salvage what you can and
re-align your savings into safer bonds, CDs or Money Market
funds.
You must do the homework yourself or employ someone
knowledgeable who understands the dilemma Baby Boomers face.
Those of us in our late fifties and sixties don't have the
years to recoup lost earnings. Much of the savings we
accumulated over thirty years or so is gone...poof,
evaporated. And most of what is left will be gone too unless
you take personal control over your situation. There is
little chance of getting back what has been lost, but you
can do something to prevent losing what is left.
About The Author
Al Kernek is a Internet marketing consultant, author and Baby Boomer. Learn more about issues facing Baby Boomers seeking to retire on a
limited or fixed income at www.BabyBoomerLifeboat.com which is also an online portal to Websites containing valuable information and resources for Baby Boomers.
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