Bad market got you down? Here’s a handful of ideas that could help you during what is rapidly becoming a very violent ride:

FORGET YOUR EMOTIONS. Do you have a diversified stock portfolio? Are you invested in more traditional stocks? Do you have a long time (typically ten years or more) until you need the money? If you answered “yes” to any or all the above, you may want to consider checking your emotions at the door, not panicking, riding it out and get this…. actually investing in more stock.

WHAT THE HECK ARE YOU DOING IN THE MARKET? The exact opposite of the above: do you have a poorly diversified portfolio? Are you invested in junky stuff? Do you have a short time horizon before you need the money you’ve invested? Are you deep into retirement?

If you answered “yes” to at any or all of the above, you may want to seriously consider bailing out before you ride this market down where the end result can be steep losses, an extended working life, or even worse, getting tossed out of your house. … Remember the simple rule of success: if you don’t need the return that might not happen anyway, why take the risk?

CONSIDER MARKET INDEXED LINKED CDs. How about this unique concept: invest in the stock markets and if you get hit hard, hold the position until maturity and you’ll get your money back. If that doesn’t sound good enough, how about this: the account is backed by FDIC insurance if held to maturity. In some cases, even if the market goes down, you can get your money back plus a little interest. … What’s the downside? …. If the markets go down and you want to get your money back, you’ll have to hold the position until maturity, which is typically anywhere from three to five years. Additionally, the tax treatment of these market index linked CDs can be very complex.

Other factors might not make this a suitable investment for you, but if you are worried about losing your money in the markets, you might want to check out these little known products that are sometimes referred to as “structured products,” “Growth CDs” or “Index CDs.”

INSURE YOUR INCOME. It’s amazing how many negative things I hear about Variable Annuities when their living benefits could bring you some security. Are you invested in the stock market with a period of time before you need to start drawing income from your investments? You may want to check out the new Variable Annuity benefits, commonly referred to as Living Benefits. … What does that mean? …. Although benefits fees and charges will greatly differ depending on which company you invest with, living benefits basically mean this: in the event your investments within the Variable Annuity goes down in value, you will earn a minimum amount of interest on your original investment that becomes the base in which your income is drawn from.

Conversely, in a typical investment account, if the account goes down in value and you later draw income from it, you are drawing your income from the value of your stocks. When investing in a Variable Annuity with a living benefit, your income is drawn from this benefit’s base which is typically the greater of the minimum amount of interest earned or the highest value the account once was. …. Confusing? …. Could be….. Worth the investment? ….. again, it could be….. It depends on a number of factors and a qualified, skilled and knowledgeable advisor that has your best interest at heart will likely help you determine whether or not you should consider these investments for your money. (Keep in mind that the ability to receive income from a VA is tied to the claims paying ability of the annuity company).

BUILD A LADDER. Investing in bond mutual funds? Values going down? … If they are, you might want to consider replacing the bond funds with individual bonds… Why? …. Well, here’s a trivia question - when a bond fund goes down in value, when do you get your investment back? …. The only honest answer is, “I’m really not sure.” But, when you invest in a bond ladder, you have dates of maturity when, if the bond values go down, you will get your investment back, which, for most people, is typically a very nice thing to know.

As with everything being discussed here (there are risks associated with any investment), don’t take it to heart and don’t rush out to invest in something like this unless you first speak to a qualified advisor.

PAY ATTENTION. I’m sitting on a plane right now traveling from Cancun, Mexico flying back to Los Angeles. Earlier today, the futures of the US market show there’s a likely possibility the markets will get ripped apart tomorrow due to a global sell-off, bond insurers getting downgraded and a number of other reasons.

If you are reading this, congratulations. You’re not only enduring one of my more dry, boring and conservative articles, but you are paying attention, which when it comes to their investments is something many people don’t do. So, if you are reading this, you’re doing a great job of exploring ideas of what to do during a violent market. But, don’t get lazy.

All portfolios, during good and bad markets deserve your attention. After all, this is your hard earned money we’re talking about, isn’t it?

THE MUTUAL FUND ALTERNATIVE. If the market tanks tomorrow (and, quite honestly, even if it doesn’t), you really should remember this: … imagine, we wake up tomorrow and the market is tanking. You are invested heavily in mutual funds and seeing financial Armageddon ahead, you want to cash out of the market. You call your broker to get out of the market first thing in the morning but the position can’t be sold until the end of the day.

Not good. But, if you were invested in something called Exchange-Traded Funds (an index that trades like a stock), you can get out on moment’s notice. … Diversification? … Ability to trade on moment’s notice? …. The opportunity to have better control of your investments? … That’s not a bad idea, but remember: there’s lots of reasons investments that don’t trade until the end of the day could make better sense for your portfolio, so don’t take all this to heart.

Just remember: the options do exist and it’s something you should likely explore when designing your investment portfolios.

GET SOME HELP. The financial services business is filled with stories of advisors that lost all their clients money, and in some horrible cases stole their client’s money. While there’s certainly some very bad advisors out there, any industry is filled with its share of bad apples. In the industry of financial advisors, I have to say that most people I have met are intensely honest and really do the right thing for their clients.

As such, if your veins are filled with stress and you don’t know what to do, why not take some time to interview a few advisors? The assistance and brainstorming sessions you can get could be one of the best dates you and your money have ever had.

DARE TO BE DIFFERENT. Earlier today a woman told me she was absolutely certain we were headed into the Great Depression Part II. Disappointed that she couldn’t make any money, I couldn’t help but introduce her to the concept of something called “inverse funds.” A speculative investment it is, but get this: the value of these funds go up when the market goes down. And in some cases, they go up double the percentage of a declining market.

While inverse funds are not a totally new concept, some of the funds are: several companies have started offering inverse funds in “narrow” market sectors such as financials, real estate, consumer goods, various international markets, etc., etc.. …. So, if you are like the woman above who is certain we are headed for global disaster and you want to continue speculating in the markets, don’t despair: these inverse funds might wind up bringing you the profits your money seeks. Of course, be sure to read the prospectus carefully investing in any mutual fund.

LEARN A NEW LANGUAGE. Have you read Thomas Friedman’s fantastic book, “The World is Flat?” It’s a fantastic book with one underlying concept: thanks to technology, innovation and a number of other factors, the world is no longer islands of countries, rather, an interconnected global society of economies and other things.

Although the global markets tanked yesterday and for (hopefully) a brief moment it may appear the world is on fire, chances are decent there are other countries to explore that are doing quite better than, for example, the US economy.

When exploring other parts of the world to invest in, however, I would highly suggest staying away from investing in individual companies (unless you a true wizard, picking individual companies in any market is a tough thing to do). Rather, consider using something such as an index Exchange Traded Fund to pick the country of your choice.

And one more for the road…..

START READING. Instead of watching American Idol tonight, spend a moment to read the paper…. a magazine…. Barron’s, The Wall Street Journal, or at best, a great book on investments. While there are loads of technical investment books to chose from, my guess is that most people will want to read something a bit light, easy to understand yet highly educational. While I don’t necessarily agree or endorse everything they say, I’ve read scores of them, and as for the simpler ones to suggest, a few that come immediately to mind are as follows (plagiarized from my previous blog):

• You’ve Lost It, Now What? How to Beat the Bear Market and Still Retire on Time (Jonathan Clements)
• The Millionaire Next Door (Stanley and Danko)
• 9 Steps to Financial Freedom (Suze Orman)
• The Trouble With Mutual Funds (Richard Rutner)
• Rich Dad, Poor Dad (Robert Kiyosaki)
• You Can Never Be Too Rich (by some guy named Alan Haft)

Bad market or good market, I hope the above ideas will help you out. In hopes the world isn’t being set on fire, I want to sincerely wish you all the best of success (and if I can be of personal help, visit my main site at www.alanhaft.com and drop us an email)…

What a way to welcome the year: the market is down, a recession appears to be imminent (if not here already) and worst of all, I still can’t find myself a Nintendo Wii.

As we enter the New Year, things may look a bit bleak, but a few resolutions I plan on keeping will help ensure my year is a success.

What about you? What have you resolved yourself to do? If you’re still looking for a few ideas, here’s a couple of scattered things to help get you on your way:

Reduce Those Taxes. Investing in managed mutual funds? Chances are you’re paying more tax than you should.

While I’m all for paying my share of tax, I prefer not paying more than my share, and that’s why I like to minimize the tax I pay by investing in index funds. Are you investing in managed mutual funds? If you are, there’s a decent chance your fund managers are actively trading stocks and as a result, they could be causing you all sorts of unnecessary tax.

Do you have an idea whether or not your funds are causing you excess taxes? Take a moment to do something really boring but effective: take out last year’s tax return, look on the first page, line item 8a and 9a under “Taxable Interest” and “Taxable Dividends.” If there are dollar amounts on these line items, and you aren’t using this money for income, then you are paying more tax than you should.

If this is the case, don’t take your portfolio to Jiffy Lube for a tune up, rather, take it to a knowledgeable investment or tax advisor. They should be able to give you a few ideas on how to save you some taxes such as investing in index funds or other options not mentioned here.

Rebalance Your Investments. Statistics don’t lie. When it comes to mutual funds, they tell us that last year’s winners are often next year’s losers. Did you make some nice gains last year in things such as international and emerging market stock funds? Congratulations. That’s great news. But just like a good roll at the dice table, it could be time to take some money off the table and put it into your pocket or somewhere else.

Save a Couple of Bucks. Invest a hundred dollars a month into an S&P 500 index fund and ten years later what do you get? At a hypothetical return of 8% per year, here’s what you get: very little taxes to pay along the way, diversification into the 500 largest companies in the country across several different industries, low fees and at the end of the day, around $17,000 dollars towards your retirement. … How good is that?

Review Your Risk. The markets are pretty bumpy these days (to say the least), and the experts out there are fighting each other as to whether we’ll spend the year running with the bulls or getting eaten alive by hungry bears. Are you invested heavily in stocks? Maybe it’s time to take a breather. After all, for a portion(s)of your money, a 5% rate of return in something such as a boring CD could be much more appealing at the end of the year than losing some money in the stock market.

Make That Contribution. Grandma sport you a few extra C-notes for Christmas? Consider using that money for a nice gift: tuck some of that money into an IRA by April 15^th, get a nice tax deduction and watch it (hopefully) grow tax deferred. By the time retirement rolls around, chances are pretty decent that you’ll be able to get yourself not one nice Christmas gift but more than a few.

 

Pay Off That Debt. Before making that IRA contribution or investing a few dollars, this one should be at the top of the list… Want to lock-in an attractive rate of return?

Many people can do so by paying down their credit card debt. Some cards I’ve seen charge an astronomical interest rate and by paying it down, congratulations – you just “banked” yourself this high rate of “return.”

Explore. I just recently evaluated a software program that could potentially revolutionize the way people pay off their mortgages. Although I haven’t completed my total due diligence yet, it appears this system could help you pay off your mortgage in about half the time. And get this…. paying off the mortgage in less time does not appear to require any additional out-of-pocket payments. … Fascinating? … Absolutely. … Accurate? …. It appears that way. … Care to know how to do this? … Give me some more time to complete my due diligence.

Write Something. Have a great idea? Why not share it with me and many others?… My new book came out in November and I can honestly say, it’s changed my life. Although I’ve written quite a few things before, this was my first major release and it’s done wonders for me on many different levels. Regardless of the profession you’re in — whether you are a plumber, painter, full time mom, or even out of work — writing about something you’re familiar with helps you stand out amongst the crowd.

If there’s any advice I’d give anyone about creating a much welcomed milestone in their life, it would be to write a book, or even simpler, a blog, a newspaper article, … anything at all. Chances are, there’s an audience out there for your thoughts and with a little time and dedication, there’s little doubt your work will find its audience.

Read. Care to tune up your investments? Learn a few things? There’s no better place to start than by reading a good book. Here’s couple of my personal favorites that come to mind:

• You Can Never Be Too Rich (how can I resist recommending my own book?)
• The Millionaire Next Door (fantastic read)
• The Intelligent Investor (the all-time classic book on value investing)
• You’ve Lost It, Now What? How to Beat the Bear Market and Still Retire on Time (practical advice from the Wall Street Journal columnist you shouldn’t miss)
• The Little Book That Beat The Market (a great read for a technical investor)
• The Automatic Millionaire (very simple, but very effective)
• Exchange-Traded Funds For Dummies (never heard about these ETFs? Start reading about them now!)
• Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor (Classic book on understanding mutual funds)
• Blood on the Street (Where did your money go in the tech crash of 2001? Here’s a great inside view on Wall Street you won’t want to miss)
• You Buy, You Die, It Pays (Life Insurance? Check out this book for some truly creative ideas)
• The Science of Getting Rich (Ever hear of Napolean Hill’s classic “Think and Grow Rich?” If you haven’t, then you probably heard of people such as Anthony Robbins and a long list of other personal-power gurus that can all trace their roots back to Wallace Wattle’s classic book that serves as a foundation to all)

Send Cards. I don’t know about you, but it’s pretty rare when I get a card from someone these days. While my email in-box is constantly stuffed, last year, a buddy of mine did something from way back in the stone age: he sent me a “thank you” card. In our age of technology, that thing really stood out; so much so, that the other day I purchased a box of thank you notes and vowed to use at least one every month.

In Conclusion. Did I miss any good ideas? … I’m certain I did. … Drop me a line. … I’d love to hear some good ones. After all, good market or bad market - there’s nothing like a good resolution kept to ensure your year is a success.

If you enjoyed this post, don’t forget to subscribe to my RSS feed!