Archive - September 2008

1
Making the Best of a Bad Situation
2
How Much Do You Need in Your Emergency Fund?
3
Crisis Equals Opportunity in Some Bonds
4
Thinking About All Our Risks
5
How Can I Tell If My Money Market Fund Is Safe?

Making the Best of a Bad Situation

Congress voted down the Troubled Assets Relief Program (“TARP”) legislation, much to the chagrin of the financial markets. At the moment, the markets continue to be in distress, despite a “dead cat bounce” in stocks today. What should you be doing in terms of your household finances?

If you’ve already established a diversified investment portfolio that fits your goals, your situation, and your tolerance for risk, sit tight.  This is not the time for making big moves into or out of your investments.  The stock market is likely to swing wildly for a while until there is confidence that the …

Read More

How Much Do You Need in Your Emergency Fund?

In my first post on emergency funds, I discussed why having an emergency fund is a wise idea. The next question is, how big does an emergency fund need to be?

The question of how much should be set aside for emergencies is one of several that people tend to avoid.  It can be avoided either by not saving anything, or by saving much more than is needed.  I’ve seen clients do both, although the former is the more common error.  Most people want to think about an emergency fund about as much as they want to think about …

Read More

Crisis Equals Opportunity in Some Bonds

The Subprime mortgage mess and its aftermath were partly the result of risks not being priced appropriately. Interest rates for risky mortgages and bonds should have been much higher given the level of risk involved. As financial markets still recover from the aftermath of risk being underestimated, there is a good chance that there are now areas where risk is being overestimated. This week’s issue of Barron’s has two interesting suggestions in this regard.

I’ve written elsewhere about the limited returns available for investors in traditional cash investments like money market funds and bank accounts.  For now, it looks like …

Read More

Thinking About All Our Risks

Thinking About All of our RisksThe financial markets seem to be taking a breather after last week’s roller-coaster rides. We’re all digesting the latest news of short-selling restrictions and a $700 Billion stabilization plan for mortgage-related debt. But now is also a good time to step back and think more broadly.

Ron Lieber, who writes the New York Times “Your Money” column, was a busy man last week, writing columns and recording video clips to help readers understand what was going on.  In Saturday’s edition, he wrote a nice article on “Minimizing Your Own Exposure to Risks.” He noted that now is a …

Read More

How Can I Tell If My Money Market Fund Is Safe?

How can you tell if your money market accounts are safe?This Monday, something very unusual happened: a money market fund began trading its shares at 97 cents, instead of a dollar. Reserve Primary Money Fund (RPFXX) was forced to write down three quarters of a billion dollars of Lehman Brothers debt as a consequence of the Lehman bankruptcy. Even though the debt may eventually be partially paid through the bankruptcy process, as a current obligation the debt has no value. Thus the fund’s share value had to drop, forcing the fund to “break the buck.” On Monday and Tuesday, investors in the fund pulled out $27 billion in response. FT

Read More

Copyright 2014 FiGuide.com   About Us   Contact Us   Our Advisors       Login