Online Chat - Greg Seibel
October 7, 2008
Do turbulent financial times have you wondering about your investments or where to invest your money? If so Greg Seibel of Edward Jones Investments will answer your financial questions.
Submit your questions now.
Moderator: The recent problems in the mortgage industry and on Wall Street have all of us wondering about the strength of our savings and investments. Today, we have Greg Seibel, a financial adviser with Edward Jones, in The Gazette newsroom to answer your questions. Greg has 30 years experience as a financial adviser, all in Emporia. Some of you already have submitted questions, and we'll work with those now. Feel free to continue sending questions. Greg will be chatting until 1:45 p.m. today and we'll use as many questions as we can in that time. Don’t forget to refresh your screen to continue to read the questions and answers as they update.
sadinemporia: Should my husband and I take our money out of our retirement accounts and earn 3% in a CD or should we continue to lose our money in our retirement accounts? We have our money invested with ING and Edward Jones.
Greg Seibel: It is hard to give a yes or no answer. How old are you? How long to retirement? Will 3% per year accomplish your retirement goal ? (it takes 24 years to double money at 3%). You need to look at these questions before you make changes that could cost you later.
moderator: What are some of the common questions your customers are asking you right now?
Greg Seibel: Many want to know why financial institutions made so many bad housing loans, and why taxpayers have to pay for it.
moderator: What should people do with their investments right now?
Greg Seibel: You should always make decisions that fit your needs, both now and in the future. Buying what feels good doesn't usually do that. Many people that bought homes over their head, or without downpayments, are now losing their homes. Buying when things look good and selling when things don't look quite as good doesn't really work. Warren Buffett once said that "you pay a terrible price when things are too optimistic".
moderator: What should people not do with their investments right now?
Greg Seibel: Try not to make decisions based on emotion. If there is a valid reason to sell something, do it. The ability to not be influenced by emotion, and using logic and common sense is a simple idea, but not easy. It goes against your emotional response of optimism and pessimism to "buy low and sell high".
moderator: What are good investments when the market is down?
Greg Seibel: Stocks and bonds of quality companies. They usually go down with everything else, but rebound more quickly when things return to normal.
quarterback: I have had money invested in stocks for many years but the value of the portfolio never seems to increase. Would I be better off to invest future money in apartments?
Greg Seibel: You should check the companies you own and make sure they have had good average profit growth over the years to determine if you should keep them. You should also be diversified in many different industries, the "not all of your eggs in one basket" theory. I am not well-versed in owning apartments, but I am sure if you contact a local realtor, they can give you the pros and cons.
quarterback: What are some tips for picking a good financial planner? What are tips for evaluating their performance?
Greg Seibel: I would recommend interviewing someone to see if they hold similiar attitudes on investments, retirement income, and tax issues that you do. Like working with an accountant or attorney, you need to be on the same wavelength. The evaluation should then be based on how you are meeting your goals that you presented.
eiggohp: Greg, I am holding on "tightly" to my ICA (a mutual fund) that I took out with you many years ago, but I get so concerned when I see it just slipping away. I did put my MM (money market) into one that was FDIC insured. Moved part of my deferred annuity into some bond investment and the rest I put in the "tried and true" CDs at 4.35%...maybe not wise, but not losing either. I, too, have a CD with Edward Jones and I know it is not FDIC insured. Should I be concerned? I have retired and this was my retirement fund and now it is falling apart. Any other suggestions?
Greg Seibel: Since you are retired, I assume you need to focus on income. The MM, bonds in your annuity, and the CDs provide income, but lack an inflation hedge. The mutual fund you mention should help with rising income, as inflation will eat up fixed income. Not knowing how much you have in each of the above, I would not give a recommedation on moving anything around. The stock market averages a 20% correction every 3-5 years, but it seems we forget that it is not pleasant. The other years have been when the difference is made. As a side note, the CD you have at Edward Jones would be a "brokered" CD, and the bank that issues it has FDIC coverage.
stevo: Greg, I have a 401K with my employeer, same as a million other people in the USA. I cannot take any of my money from the investments until retirement or I quit my job. I have 10 more years till retirement and am wondering what I might expect that maybe might be there — if any. I had approximately $200,000 at the beginning of 2008 and don't even want to know how much I have lost. Do you predict that It will come back? When do you predict? Or should I with other employees go to the company and see if there are other options? Also, can I lose all the initial (my own money) invested? Can the government protect this or is it doing anything concerning this? I am sure I am asking the same question as many!! Thank you.
Greg Seibel: As I mentioned earlier, the stock market has averaged a 20% or more drop every 3-5 years. The other years have made the return go up, and have always gone up to new highs. There is no assurance that will happen, but all the businesses in the country try to make more profits, not less. During economic slowdowns or recessions, profits do tend to drop. Stock prices drop because of that. Most companies work on profitability and when the recession ends, come our stronger than before as a group. Your 401K retirement plan would be a qualified plan with rules as to how the money is segregated from your employer. The assets are yours, and the investment choices you make will give your return. You will do as well or poorly as the investments in the plan. You should have several choices with various levels of risk and potential return.
admireed: When will the Dow be above 14,000 again?
Greg Seibel: We are currently down about 30% from that Dow high of a year or so ago. Doing the math says we have to go up 40% from here to get back to that level. I would only guess that that won't happen in one year, but will take a few years for profits and confidence to return and move prices higher.
Moderator: That’s all the time we have for our chat today. We appreciate Greg Seibel spending time to answer the questions. We know that we learned some things today. We don’t like the fact that it takes 24 years to double an investment at a 3 percent return. And we didn't remember that the markets average a 20-percent correction (a polite term for “drop”) every three to five years. We suppose it’s time to see whether we have some capital to invest by “buying low.” Or at least we can hope the managers of our 401Ks and mutual funds are doing the same so we rebound well when the market comes back. Thanks again, Greg, for educating us.