Simple Tips For Coping With The Financial Crisis

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By: Cameron Blythe

Published: December 5, 2008 Exclusive Article
The changing economy is frightening many investors. Everyone is confused about what to do in this time of uncertainty and change.

These are 5 tips to help you navigate your financial future:

1) Will the financial crisis leave you vulnerable?

Ensure that you are covered by the FDIC for your checking, savings or certificates of deposits. Everyone is insured through the FDIC for $100,000 for each person and for each financial institution. The FDIC insures joint accounts that hold up to or less than $200,000 in checking, savings, or CDs at an approved institution. Make a call and check where you stand. That one call can save you a ton of worry and anxiety.

2) Could you lose money in a money market account?

Although they are not covered by FDIC protection, money market accounts have been a rather safe investment choice in the past. The Reserve Prime Money Market fund's net asset value fell below the psychologically important $1.00 barrier last week. Investors accept the lower returns from money market accounts due to their perceived safety. A money market fund failure, therefore, would shake investors' confidence in money market funds as well as the fund company. To keep their investors happy, most institutions will inject cash into their money market funds to keep them from breaking the buck. Companies such as Vanguard and Fidelity publicly release documents that give information on the status of their money market funds holdings. Call or visit online the company that holds your money market mutual fund account and check with them for their views about their fund holdings.

3) Is your money in danger because of the institution that is holding it for you?

I think keeping your plans intact, and waiting out the bad times, is the best thing to do. Although some mutual funds are connected to Lehman Brothers, AIG, Merrill, and other companies similar to those. The Neuberger Berman funds are an obvious risk, as they were under the Lehman Brothers & are being sold. People with holdings in different companies will have to investigate how new management will affect their assets. Investigate who is handling your money and then decide how you want to proceed. Of course if you sell, there are taxes to be paid.

4) Would it be a good idea to discontinue investing?

Poor performance in the stock market will not continue forward until the end of time. Historically, there is a re-occurring trend to produce gains in the market after suffering a period of downward losses. For instance, a decade riddled with losses from 1972 to 1982 directly preceded the record gains in the later 1980s and 1990s. Do not loose hope and discontinue your stock market investment strategy. Investing now is better than anytime in many years. Be cautious and remain diversified. No one can predict the future, so put your money in several different places and keep adding to your assets.

5) You need to relax and breathe easy.

It's crucial to do what is necessary in order to protect your assets. Make an appointment with your Financial Advisor or a Financial Coach to get some support and review your current holdings. There is no way that there will be absolutely no risk involved. There is always a chance that you will lose some of your money, so there is always some sort of risk involved. Even the wealthiest of individuals have lost money at one time or another, as do most average individuals at some time during their lives. You need to be careful so that if you do lose money, it will not bankrupt you. A small loss won't prevent you from eating, having shelter, or having a smile on your face.