Well, this is actually the third time I’ve gotten a request like this, and I’ve emailed back both times before. Probably pointing out that I should address it publicly.
So it is a fairly delicate situation first of all, because each person has their own investing thresholds and personal choices when it comes to money, so keep in mind this is MY own feelings on the situation – refer to my disclaimer that I’m not a professional, just someone that has had similar questions myself.
Hank, As you are aware the stock market has been pretty uncertain as of late and I didn’t want to be part of the fall. I didn’t want to lose any more of my money than I had to. I am only just getting started investing so I want to get started on the right foot, so I took what I had (about $10,000 out and it is sitting in my checking account right now.
I figured that keeping out was better than being in for the time being, but what about now? There has to be something that is making money? Where do you recommend I put it? – Lazlo from Mississippi
Hey Lazlo, and thanks for swinging by MIB!
First off, realize that the stock market is volatile, it’s just the nature of the beast; but be assured that (and I assume you’re fairly young still) you have a LOOOONG road to ride still. You’re going to see swings like this in the market, that’s how it works.
The benefit to it being low though, is that you’re BUYING low also. That means you’re getting more bang for you buck than if you were to buy the same stocks when the market is doing well.
Additionally, if you’re investing in well-researched stocks/bonds/mutual funds and not gambling with your choices, there is a good chance you’re going to make it alright in the long run.
If our stock market takes a dive, that means our economy is taking a dive and you’re likely to have worse problems then where your money is invested.
You also say that you have it sitting in your checking account right now. I can assure you that your money will make you more money by sitting on the end of a fishing hook in the middle of the Atlantic than it will in your checking account.
At the very least, put it in a high-yield savings or MMA account. I’m still getting a decent 3.30% from WAMU right now even when times are fairly tough. I’m keeping the e-fund sitting there for now, but still dumping 15% of my salary to my 401k in addition to maxing my ROTH out.
It’s not a bad time to be in the market if you’re young. If you’re under 40, you’re probably looking at another 20-30 years of letting your money simmer. If you’re over 50 and looking to retire, maybe now isn’t the best time to have the $ in there.
But guessing as to where you’re at in life (early 20s?) I’d recommend you PUT IT BACK IN! If you’re unsure where to invest it, I’m happy to help. I helped FFB out a while back with my take on his 401k options and I’m willing to help if I can!
photo by: /jimmcd/