ALBANY, GA (WALB) - The stock market made up some of Monday's record losses. After a nearly 800-point drop Monday, the Dow was up 500-points Tuesday amid optimism that Congress will reach a deal on an economic recovery plan.
Still, many are worried about their savings and retirement plans. There is no simple answer with so many complex financial issues going on right now but financial planners say patience instead of panic could be the best solution.
When the Dow went down by an historic 777 points in one day, concerned calls to Kelly Jenkins went up. "I have been getting a lot of calls from clients," said Jenkins.
Jenkins has been a Certified Public Accountant since 1990. He's never seen the financial market in such distress. "It's very uncertain times right now," said Jenkins.
Just like his clients, he's been watching the numbers closely. They're going up and down. "It seems like we wake up to a new story everyday," said Jenkins.
Jenkins agrees the government needs to step in. "I personally don't like the word 'bailout' but I do think a recovery plan from the government is needed," said Jenkins.
But in the meantime consumers are scared. What should they do about investments? What about their 401k's in such a volatile market? "It is a scary time and it's an unprecedented time," said Jenkins.
Jenkins says the present situation is proof that money should not be invested in one place. Consumers should have diversity in their portfolios. "A well-diversified portfolio includes equities or money in the stock market . It also includes a healthy cash reserve," said Jenkins.
That also includes a well-diversified bond portfolio. This way all of your bases are covered. Take a young investor for example. "60 to 70 percent stock portfolio and a 30 to 40 percent bond and or cash portfolio is appropriate," said Jenkins.
However, a big concern goes out to retirees who are now shaken up or those close to retirement age. "For somebody that is 60 to 70 years old, I would not have much more than 50 percent in the stock market because volatility is not our friend when we are taking money from the account," said Jenkins.
Jenkins' biggest piece of advice is not to panic. Many may be inclined to re-allocate or even pull money out but Jenkins says to move now is the wrong move. "Now is not the time to panic. All of our equities in all parts of the stock market are down right now because of the fear and the uncertainty that's in the market," said Jenkins.
He feels the market will bounce back. It'll just take investing in some patience while we wait.
Jenkins says having a healthy cash reserve on hand is key. For a younger person, 6 to 12 months should be available. 2 to 3 years should be on hand for a retired person. That way you can tap into that money while the market isn't good and wait for it to recover.
And again, experts say you don't want to sell stocks while prices are down so much. You'll just lose money. Now may also be a good time for young first-time investors to take a risk and jump into the market because they can buy low.