Bankers: Be cautious, patient

COLUMBUS -- The plummeting stock market has many people worried about their financial futures.

Ten-and-a-half years ago the Dow Jones industrial average was lauded for reaching the 8,600 mark, a record achievement. The same close this week created quite the opposite response as the DOW reached its lowest mark since 2003.

Thursday, the DOW closed at just under 8,600, falling more than 675 points, a single-day decline of more than 7 percent, the worst percentage loss this year and down from an all-time high of 14,164 one year ago.

Steve Snider, assistant vice president of Cornerstone Bank, said he anticipates it will be a matter of months before the market begins to stabilize and the $700 billion federal rescue package will begin to take effect.

“It may take several months for the Wall Street stuff to shake out of the market,” Snider said.

Although a majority of investors are concerned about their stock portfolios, the biggest distress may be among people who are facing retirement.

Snider recommended that those individuals should reconsider their retirement plans and wait to give the market a chance to rebound.

“With what has happened in the market, they may want to postpone retiring for a couple years,” he said, and “let some of the additional market items work their way through, instead of seeing negative figures” in their retirement accounts.

Pat Hilderbrand, branch manager of U.S. Bank in Columbus and David City, said everyone should re-examine their portfolios, understand where their money is going and consider less aggressive investments.

“Most 401ks let you put the funds in a (certificate of deposit) and other accounts,” Hilderbrand said. “You can always put it in something very safe, such as (Individual Retirement Accounts) or CDs.”

“I would continue building your 401(k), especially if the company is doing matching, but diversify to a far safer, less aggressive portfolio,” she said.

Mary Sutton, assistant vice president of business development for First Nebraska Bank, provided similar advise, stating although such investment may not receive, historically, as great a rate of return, “you are guaranteed to get the established rate back and not lose the principal.”

During the current condition of the stock market, many investors are losing their principal investment, she said, so this is a time to play it safe.

But that does not necessarily mean bailing out of the market.

“Go to a very trusted advisor, someone trusted in investing in the stock market, who will help guide you on whether or not to get out of current investments,” Sutton said.

Snider provided similar advice, especially for those who are years, even decades away from retiring.

“It is better to keep (investments) in the market so when it rebounds the portfolio should increase again,” such as what happened following the Great Depression, World War II, the dot-com bubble burst and 9/11, he said. “After a few years everything rebounded.”

Snider said for anyone who may have disposable income, now may be the time to jump into the market and take advantage of low share prices.

Now, “would be a prime time for somebody (younger) to begin developing a larger nest egg, see their investments get larger,” he said, but advised anyone to consult an investment professional before proceeding in such rocky waters.

Sutton advised that, in the least, that people with that disposable income should reconsider making any extravagant purchases during such economic instability, because they may need that money down the road.

“This is a position none of us want to be in,” she said, but “now, in my opinion, is the time to listen” to financial advisors.