Financial advisers: No need to panic

In long run, investments should be OK

By Noelle Phillips - Noelle Phillips

Early next month, many banks, brokers and corporations will start sending out their latest financial statements with discouraging news for investors.

The recent financial meltdown on Wall Street means almost everyone's balance will show a loss for the quarter that ends Sept. 30.

But those who help people manage money or dig out of financial trouble say there's no need to panic.

"It will be down but not down as much as they think," said Cheryl Holland, a certified financial planner and president of Abacus Planning Group.

The recent headlines are enough to make anyone anxious, especially as Congress debates a $700 billion bailout of the nation's financial system.

Still, financial advisers say most consumers should take the long view, while those closer to retirement may want to consider some changes. And it's a good time to learn about investing.

While financial advisers are getting a few calls from worried clients, most said their phones have not been ringing off the hook. And few took the proactive step of sending out newsletters and holding conference calls to soothe frazzled nerves.

The situation is difficult to understand and leaves almost everyone uncertain about their personal financial status, said Wayne Odom, director of Consumer Credit Counseling Services of Columbia.

After all, if the banks are in trouble, what about me? What about my retirement nest egg? My job? Can I get a loan for a house, a car or a college education?

"It seems like a long way from Wall Street to Gervais Street," Odom said. "A lot of people just don't understand it."

Thus far, the financial crisis has not sent people in the Midlands en masse to bankruptcy court or credit counseling classes.

"The loss of wealth is not what hurts consumers," said Jenny Dalrymple, a Columbia bankruptcy attorney. "It's loss of income or the inability of the income to keep up with rising gas prices and rising food prices.

"They may whine about a drop in stocks or their 401(k)s but that's not what will drive people to bankruptcy."

As of Tuesday, the stock market was down 5 percent from June 30, the date people last received updates on their investments, Holland said. The dollar figure may look big $5,000 on a $100,000 investment but that's not too high a percentage to make up over time, she said.

For an investor with more diversity, such as investments spread across stocks and bond markets, the percentage of loss will be even smaller, Holland said.

"You've lost money on stocks on a temporary basis," she said. "If you don't need the money for the next 10 years, then leave it alone and let it grow."

People who are buying into 401(k) plans and other investments are getting more for their money while the markets are down, Holland said.

Thomas Gore, president of Core Advisors in Chapin, said a diversified portfolio is designed to weather the financial storm, even one as bad as the current one.

Those who are closer to retirement should move their money into less risky investments so they don't lose out during these inevitable downturns, he said.