The rap on women as investors is that as a group, we tend to be too cautious.

Caution certainly seems warranted these days as the stock market swoons and the financial news all seems bad.

But as Jim Jubak explains in his recent column “When to start investing? Now,” those who dive in when others are fleeing tend to do very well over time.

If you’re in or near retirement, you’ll want to consult with a fee-only financial planner before making any big moves either into or out of this market. You can get referrals from the Garrett Planning Network. (You also might want to schedule a session even if all you need now is a little hand-holding.)

But if you’ve still got a few decades before you’re going to quit work, this could be a prime opportunity. You may have to strap in for a bumpy ride, but history has shown us that those who stay in the market prosper in the long run.

TAGS: financial crisis, financial planning, Investing, women and investing

My buddy Chuck Jaffe had a lovely turn of phrase in his recent MarketWatch column. Chuck wrote:

While investors understood that bad times were possible — that the huge spikes of good years could become the awful daggers of a downturn — they never really expected to have it happen to their own portfolio.

The thing is, we’ve been through this before–a few times. Those past experiences have informed the rules that aspiring planners are taught in the Certified Financial Planner training courses. Those rules include:

1. Don’t put money in the market if you can’t leave it alone for at least 10 years. I notice that some planners over the years have shortened that time horizon to five years. The bear market we’re wrestling with today may change their minds.

2. Diversify. I’m hearing complaints that “diversification doesn’t work,” and it’s true that in crisis situations, like this one, all types of stocks drop together. Which is why you diversify into bonds (including government bonds) and cash, as well. Those of us who have some Treasuries and cash in our portfolio are still getting our butts whupped, but not as much as those who thought fixed-income investments were for weenies.

3. Stay invested. This is the hardest part. We feel bad when we lose money–even though these losses are just on paper, and they’re no more real than our former gains were. Losses or gains only become real when we “realize” them, or sell.

But we want to feel better, and avoiding further losses can feel like the right thing to do.

It may be the right thing, if you have money in the market that should never have been at risk, or if you’re recently retired or about to retire. That’s something to take up with a fee-only financial planner.

For the rest of us, though, the problem is that we won’t know when to get back in, any more than we knew when to get out. By the time we feel comfortable enough to invest our money again, we’ll have missed most of the gains.

And there will be gains again, some day. When that day comes, we’ll hopefully be a little wiser about risk.

TAGS: financial crisis, Investing, risk, Risk-taking

Liz Wolgemuth of U. S. News and World Report interviewed me for a piece she published yesterday about the stress women are feeling about the state of the economy. As things get more difficult, women are facing challenges both at home and at work.

She asked me if I thought women were feeling more stress than men.

Answer: Yes, because by 2:1, women serve as the family CFO. And as CFOs, they are faced with decisions about how to make ends meet in the short term as well as longer term issues such paying for college and saving for retirement.

She asked me if women should hold off asking for a raise (or a bonus) given the struggles businesses are facing now.

Answer: Not necessarily. I believe that if you deserve a raise, you should ask for it. Of course, as always, you should be prepared to articulate a strong case on your accomplishments on behalf of the company ─ not just what you have accomplished but how your contribution has helped the firm:

• Increase revenue
• Decrease costs
• Manage risk

If you want the nuts and bolts of how to negotiate compensation, email me at carol@negotiatingwomen.com because I am offering a complimentary download of our e-learning course, Getting What You’re Worth (a $99.95 value) to The Thin Pink Line readers in return for your agreement to let me know how you benefited from it. Please email me right away as this is a limited time offer!

As I told Liz, it has been my experience that stress is exacerbated by feeling powerless. When things you can’t control are going in the wrong direction, be proactive. Putting a full financial plan ─ one that addresses financial objectives, considers ongoing (hopefully rising) income as well as expenses ─ in place will allow you to see where the gaps are and to take appropriate action. You’ll feel better, trust me.

It also helps to breathe deeply.

TAGS: difficult economy, financial crisis, financial freedom, negotiating pay, planning for the future, reducing stress

I was toweling off in the locker room when I overheard an older woman instructing a young friend.

“Go get your money out of your bank now,” the woman said authoritatively. “You don’t want to be stuck without cash if the FDIC takes over.”

Sigh.

It’s true we’re out of practice dealing with bank failures. We haven’t had a sizeable number of them since the savings and loan crisis, when more than 1,000 thrifts went out of business.

It’s also true that IndyMac Bank won’t be the last failure we see. IndyMac was certainly the biggest so far, but analysts tell us dozens more may close before the financial crisis shakes out.

Still, there’s no reason to panic. Most FDIC bank closures are almost non-events, as far as the bank’s customers are concerned. Regulators typically have another bank lined up to take over before the troubled bank is shut down on a Friday; by Monday, it’s business as usual.

Even at IndyMac, where a new federally-chartered bank had to be created, customers could access their accounts via ATM, debit cards and checks over the weekend. By Monday, they had full access to their accounts.

Very occasionally, the FDIC will decide to shut down a bank without a buyer or new bank to take over. In that case, debit and ATM cards will stop working and it may take a few days to receive an FDIC check for your insured deposits. But that’s a rare event, and not very likely.

If it makes you feel better to have some cash on hand, fine. You should also check to make sure your deposits are fully insured, and if not, to spread them around at different banks.

But pulling all your money out is just silly. Don’t let fear and ignorance, packaged as advice, sway you into making bad decisions.

TAGS: bank failures, banking, credit crisis, financial crisis