Advice from Strangers
This week's guest:
I maintain a mix of large and small cap
growth-oriented mutual funds in my 401(k). Boy, it's
really taken a beating over the past two years. Should
I get out of the market and put my money in something
fixed until things get better?
Wheeling, West Virginia
What? You actually still have money invested in
the stock market? Good God man, what are you,
some sort of sick, twisted financial suicide bomber?
For the love of Christ, sell, you jackass, before
it's too late!
I... um, in other words Bob, I think that you would be
prudent to diversify your holdings further. Consider
reallocating 20 percent of your portfolio into high-grade
corporate or government bonds.
I've invested about $25,000 for my
childrens' college education into several no-load
funds. Do you think it makes sense to cash out the
funds, take the tax-deductible capital losses, and
reinvest the money into a 529 plan? I hear that
they're a good idea.
Did I hear you right? Did you just say that you've
gambled away your kids' future in a game of Wall
Street Russian Roulette? FALL BACK! FALL BACK!
INCOMING! CHARLIE'S ALL OVER THE COMPOUND! CASH OUT
AND PUT THAT SCRATCH INTO GOLD AND GUNS, BABY! THE
APOCALYPSE IS HERE!
So... I, er... what I'm getting at Ross, is, uh, the
529 is an excellent vehicle for college savings. Not
only will you be able to write off those paper losses
on your original investment, but your contributions
into the new plan may be state-tax deductible as well.
(Transcribed by Miles Walker)