Expert: Steve Hach - 3/28/2008

Question
Since the market is currently down, should I stop putting NEW money into the things I currently invest in?

Answer
Hi Nikki,

If you are doing a regular investment plan that is geared toward retirement far into the future then the answer is "no," you should just keep making your regular contributions and purchases.

Remember, the idea is to "buy low, sell high."

The tendency is for people take a loss, pull their money, and then miss the rebound and not make money when the markets turn back up.

If you do this, you will always lose.

As long as you are happy with the investment distribution in your portfolio--eg you have a good mix of small, medium, large stocks, both foreign and domestic, you just keep making your regular purchases.

If you think some allocations are wrong then shift them around a bit--for example, too much US exposure, not enough emerging markets, etc.  If you are really worried, then you just keep investing but you put the money into safer things--bonds, money market, etc.

Remember, you should NOT concentrate too much money in company stock and always need to be diversified--see what happened to the people at Enron and Bear Stearns.

As long as is this is a retirement account you should just keep the money invested and keep adding to your nest egg.

If you sell now all you will do is lock in your losses, if you stop contributing, all you will do is miss out on the lionshare of the gains when the market rebounds.

Hope this helps.

Best,

Steve