TV/YouTube interview (guest Louis Barajas, host Amy) giving practical investing advice for times of market fear. Barajas emphasizes four key actions: (1) revisit your investing purpose and time horizon (don’t stop 401(k) contributions if retirement is years away); (2) check diversification across cash, fixed-income (bonds) and equities and use each according to need; (3) consider opportunities during market downturns (citing March 9, 2009 when the Dow hit about 6400); and (4) avoid following the crowd or making knee-jerk, fear-driven decisions.
Questions this video answers
March 9, 2009.
About 6400.
My Street Money.
Chapters
Sentinel, CBS2, KCAL9 and 947-The Wave.
Welcome back 843 and financial expert Louis Barajas is back with us this morning. Louis is the author of My Street Money, and we want to welcome you back to the show. And of course, you always come to talk about investing, but during times like this, a lot of folks are scared. You know, this is a tough time for our country financially, and so a lot of folks just want to stick that money under the mattress.
But that's right.
Not the right thing to do.
No. Well, what's happening right now is people are paralyzed by fear. They're watching the news and they're saying, oh, my God, everybody's talking about what's going to happen with this debt ceiling debacle, with this budget crisis. And I always say, look, you have to remain calm and you have to, you know, cool heads always prevail. So there's four things you should really do. The very first thing you should do is go back to the basics and understand, why am I investing? What's the purpose of investing? And again, always go back and look at the goal and your time horizon. If your goal is retirement and you're still 10, 15 years away, you shouldn't let this really get to you. You should still be putting money away in your 401k plan and not stop investing.
Okay, so keep going.
Keep going. Right. The next thing you actually should be doing is look at the diversification within your investments. So, for example, there's really three major types of investments. Cash type of investments like savings accounts, money market accounts. There are fixed type of investments like bonds and equities. You're going to use each one for a different purpose. Ideally, if you need money now, the last thing you're going to be doing is putting money in equities or in mutual funds. You want to have it in cash if you need to live on money now. But if you have goals for growth, they need to be in equities. And this may be a perfect time to get back into the market.
Okay, and when you say investing in cash, what exactly do you mean for folks that understand?
Well, cash. Yeah. So what happens? Cash is actually like cash, cash underneath the mattress type of cash, but it's also having money in savings accounts. But the problem is people say, well, I'm only earning 2/10 of 1, but you need that money to live on now. So the last thing you want to do is say, you know what? I want to take advantage and gamble with my money and put it into A mutual fund with stocks in it again. But if you have goals that are going to be seven years or out, don't be putting the money in cash. It's not going to grow for you. In fact, inflation is going to beat the interest that's in the account.
And the third thing you want to take a look at is, you want to take a look at is the potential opportunities that are out there. The last time we had this kind of crisis was March 9, 2009, when we hit the bottom. If you take a look at the news, The Dow hit 6400. And so what happened was everybody was so scared. And that was the ideal time to get back into the market. Right. So if we have a lot of volatility coming up this week and you think the market goes down and you haven't been in because you've been so scared from the very first time, maybe it's an opportunity to get back in. So take a look at that. And the last thing you want to do is you actually don't want to follow the crowd. Oh, okay. Because everybody gets caught up with emotions. You're watching the news and if everybody starts getting out of the market, it's again, go back in the market, get back in and invest in again. But always focus on the basics. What is the goal, what is the time frame? And what is your risk tolerance?
Okay. And don't react to fear, don't do.
Knee jerk reactions again, cool heads always prevail and remain calm and don't get caught up with the emotion because if you do, you're bound to make a mistake.
Great advice. Thank you so much, Louis Barras.
Thank you, Amy.
And giving us that important information. And another man with important information, our meteorologist Rich Fields. Good morning, Rich.
Good morning, Amy. Want to call your attention to the bottom right hand corner of the screen, 62 degrees here in the San Fernando Valley, along venue.
