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Rosalyn J. Cronin
Certified Management Accountant

Rosalyn Cronin is a Certified Management Accountant who loves to give people advice on becoming a Savvy Spender.

She has been counseling clients about personal money management for years, steering them away from potential disaster and helping grow a healthy attitude about money. “It is not about how much people earn; it is all about how they spend what they have” is her favorite tip.

Market Meltdown – What about My Money? Part3

I am not a financial advisor and do not give advice on specific stocks, mutual funds or other investments. This third in a series of articles will explore different options for your money as you near potential retirement years.

The recent turmoil in the market, combined with the word “recession”, has many a potential boomer retiree scrambling for advice. Before you panic, remind yourself that until you sell your shares you have not incurred any losses. Your statement reflects the current market value of your holdings, but does not predict the future. If the economy recovers in a short period, the loss may disappear, or be substantially smaller than that you see in this month's report.

The first step is to sit with your financial advisor for a serious chat about your current position. If your advisor has stopped answering his phone, or she has changed jobs and is working at the local convenience store, find a new advisor.

When you meet with your advisor, have your paperwork and questions ready before you sit down. Don't rely on him to have your information and answers ready, although it is the mark of a good advisor if she has your information, some projections, tea and cookies and a big box of Kleenex handy.

The type of questions you might want to ask will concern:

1.  How much of my portfolio is in a high risk area?

2.  How much is in Nortel or similar stocks?

3. How much is in the medium risk area?

4.  How much was sheltered in money market?

5.  How will this affect the years before I can comfortably retire, given that the market rebounds in one year? Three years? Five years?

6.  Are there some shares I should be converting to money market?

7.  If I decide to invest more money this year, where would they suggest I park it?

Listen to the answers and listen to your guts at the same time. Remember most financial advisors are paid commissions by the fund holders, and if your guts tell you the advice sounds slanted towards his needs rather than yours, get a second opinion.

When there is a correction in our economic picture, the good service providers rise to the top. They will have been around for a while and know what they are doing. They plan to be around a long time still. If you aren't sure, ask several friends, business associates and your buddy who never takes any risks in his life. Meet with several until you find the one who instills confidence in her ability, and a real feeling that he has your best interests at heart.

In the meantime, take a sheet of paper and write down your assets – home, savings, vehicles, bank balance – and your liabilities – mortgage, loans, credit card balances, and line of credit. If you are approaching retirement you want the mortgage paid off along with zero credit card balances and minimal loans.

Next month we will discuss ways of changing spending habits to increase your odds of retiring on your own terms, or handling an unexpected downsizing at the job site.

 




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