These are frightening times when it comes to investing and and holding on to your money! As I write this the DOW seems hell-bent on going retro – retreating to ugly places we have not seen for years! And we all just sit and wait with baited breath for the next bad news!
Of course, the optimistic investor with the proper long-term horizon might be saying “wow, I see a major buying opportunity right around the corner!” There is definitely a big liquidation sale going on right now, and you can buy some really great quality companies at a fraction of their value!
But I’m not going to go out on a limb here and tender investment advice in this entry. I would encourage people to do a little basic safe house keeping –
- Check your FDIC insurance limits. Keep in mind that depending on your account, you are typically insured to $100k per institution (trusts and joint accounts carry bigger limits), yet many people are running balances in excess of this number. Also, you might be invested in money market accounts that are not insured. Double check the status of all your cash, and shift accordingly to maintain proper FDIC insurance!
- How are your securities being held in your investment accounts? Here is a little-known fact I just discovered. Some brokerage houses hold your assets in a street name as opposed to your name. This could be dangerous if your brokerage house were to collapse, as your ownership might be questioned, and your assets could get thrown into a big bucket parceled out via bankruptcy. It’s not a bad idea to verify with your broker that your assets are held in your name, so no matter what happens to the brokerage house you get to keep your assets.
Though my portfolio is pretty ugly compared to a couple months ago, I am taking some solace in the fact that I have been playing it pretty conservative lately. I have been buying 30 day to Two Year FDIC insured CDs for the last few months, being careful to observe the FDIC limits per institution. While there might be good rates floating around in your home town, I have found the easiest way to manage a lot of CD trades is through Charles Schwab. They have a CD trading section that changes constantly, and makes it very easy to buy from many institutions to maintain your FDIC limits. Schwab manages the process and the rates tend to be very good.
Good luck, remember the one sure thing about the market is that it eventually goes up, and avoid open windows! It’s only money!