Stock Market Plunging on Financial Sector
Despite the news that the Federal Government plans to ensure the continued (and hopefully solvent) existence of Fannie Mae and Freddie Mac, the stock market is not a happy market this morning.
Ben Bernanke did not help matters, either, as he went before Congress this morning to inform the country that we are running into economic difficulties that he did not expect a few weeks ago. The news is that things are more dire than he expected back when he was proclaiming that the worst was over. Obviously, it isn’t.
Most of the problems are coming from the financial sector, where banks are having liquidity problems and losing money on continued subprime writedowns.
What to do as the stock market tumbles and bank worries set in
There are plenty of worries about how safe money will be right now, whether in banks or in stocks. The first thing to do is to take a deep breath. Don’t panic.
Stock market. Consider your investment portfolio. Do you have solid stocks? Index funds? Can you re-allocate some of the weaker investments in your portfolio? Remember that, over time, the stock market gains overall. Don’t pull out complete. Take a measured look at what you have, and make some changes if solid stocks are what you need. Also, you can look at other investments to hedge against stock market loss.
Banking worries. Many people are worried about whether or not their money is safe in the bank. The good news is that the FDIC insures bank accounts (in insured banks) for up to $100,000 for individual accounts, $200,000 for joint and $250,000 for retirement accounts. So as long as your money is in an FDIC insured bank, it is safe. Of course, if you have more money than the limits in one account, you could lose the uninsured money.
Spread your money out to other FDIC insured banks if you are approaching the insured amount. This way you can keep more of it safe. The old saying about eggs and baskets definitely applies here. Don’t panic and withdraw all of your money. Massive bank withdrawals due to panic are part of the reason the Great Depression occurred.
Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions.
Tags: stock market, stock market news, investing blog, investment portfolio,
economy, banks safe, financial sector
