Stock Market: Are You Afraid of the Dark? March 10, 2008Posted by pf in Uncategorized.
Tags: debt, emergency fund, millionaire in the making, net worth, Retirement, ryan and hope wells, stock market, stocks
The last couple of week have been grim…and the outlook seems to be getting darker all the time. You may recall over the last couple of months I have made contributions above and beyond my normal rate in an attempt to buy on the way down.
Of course, not surprisingly, I had no idea how far it might really go. Nonetheless, I’m staying the course and will shortly invest another chunk to complete my Roth IRA contributions for 2007. Meanwhile, I’ll remind myself that there are no monsters under the bed and I shouldn’t be afraid of the dark.
On the lighter side…
Recently, I read one of the “Millionaires in the Making” articles on CNNMoney. Sometimes they have something of use, and often they are moderately entertaining. In the most recent article about Ryan and Hope Wells, there was a particular item in the section entitled “Our Expert’s Take” that I found interesting:
“DeCharles believes that the Wellses are smart to prioritize their emergency savings, which she recommends they keep in a money market fund with no stock exposure.”
“Forget the funds for now,” DeCharles said. “Especially with the market heading down, they have to build up their cash reserves first.”
Now, I have written before about what I think about this topic (Do I Need An Emergency Fund?). However, that’s not what struck me. What caught my eye was the remark about staying away from equities…”especially with the market heading down”.
Ack! Now, not everyone may feel the same way, but in my view, a couple in their twenties should not be shying away from equities…particularly when the market is headed down. Don’t get me wrong, I understand the person wanted to make them feel good about their choice to focus on building up an emergency fund and rationalized it with the whole market going down comment. I just think it’s a bit short-sighted is all.
I think the take-away is that financial advice is just one more data point amongst many (hopefully), that you use to make your financial decisions. No one knows “the answer” and if they did with any certainty…they likely wouldn’t share it with us!