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Tuesday, August 9, 2011

Tips for Surviving Stock Market Swings

Watching the stock market drop is difficult and puts many of us into panic mode. Before making any investment move, in a down or even up economy, get the facts and understand why you are making the investment decisions you choose.

Here are some important things to consider:

  1. Understand what a “real loss” is.
    You only have a realized loss if you actually sell an investment at a price below its purchase price. Watching the value of a portfolio of investments decline in value, sometimes steeply, can be frightening. While it is important to think about how to preserve the value of your assets, don’t let panic drive your decision making. Remember, you realize a loss only when you actually sell an investment and you control the timing of any sale.
  2. Let needs and goals, not panic, drive your decision making.
    DFI urges investors to make informed decisions about their long-term financial holdings and to consider seeking the advice of a trusted investment adviser or financial planner before making any sudden moves with their money.
  3. Beware of cashing out your 401K early.
    If you’re thinking of cashing out your 401K, make sure you are aware of the potential consequences. If you cash out before you are 59 ½ and do not roll the proceeds into an IRA or another employer’s plan within 60 days, you may subject to tax and an early withdrawal penalty. For more information, go to:
  4. Verify licenses of financial professionals.
    Using an investment adviser or broker? Check their background and make sure they are licensed in Washington. A financial professional may be the one to help you get through this financial crisis. However, it is critical that you check out your investment adviser or broker salesperson before you entrust them with your money.

    Getting information about a financial services professional is easy. You can call DFI at 1-877-RING DFI (746-4334) and we can help you check an individual or company’s complaint history, employment history and proper registration with the state.