Financial Advisor Answers Your 401K Questions

(NEWSCHANNEL 3) - With the news of the Federal Reserve dropping interest rates and the stock market taking a plunge, many people in West Michigan are concerned about their investments.

So Newschannel 3 invited financial expert Timothy S. Rogowski, owner of Wings Financial Group, to answer your questions on Tuesday evening. Below is a series of your questions and Tim's answers.

Q: We have been getting our credit score to improve, stashed away a modest down payment and found a decent deal on a house. Is there any reason why we should not buy right now? Are there advantages to waiting? - Rohan

A: Without knowing more about you, your situation or where you're looking for a new home, I'm somewhat uncertain of some of your situation. Nevertheless, my real estate friends tell me that there are boodles of motivated sellers...homes aplenty. Also, with the interest rates having been cut today, money is 'on sale'. I'd consider running, not walking to meet with an experienced realtor.

Q: Should I just leave my 401K alone or do something with it? The last two months I've lost over $20,000 on a $100,000 investment. I'm starting to get nervous! - Worried

A: Like the previous questioner, your situation is a mystery. How old are you? Single, married...etc. Generally, however, I'm an optimist. Interest rates are low now for a reason; an accommodation for situations that need repair. Whether you like the war situation or not, money spent on victory is money spent on our workers and their livelihood. Economists would label this a guns or butter economy...and we're obviously spending more on guns than social programs. Political observations aside, there are winning companies in growing industries that should be reviewed. As for your precipitous loss, are you working with a professional that can help you check for timeliness and suitability? Those two labels are pivotal to any portfolio's construction. "Worried" please reveal more about you in your follow up.

Q: Does this mean that interests rates for Mortgages will drop. My current rate is 4 7/8 however I have a $5000 credit care, and a 20000 line of credit that I would like to role into one payment. Would this be a good time, or should I wait to see if they drop? - Karen

A: Your question is compelling, indeed, but one that I'd pose to a mortgage lender. That's a specialized situation and I'd feel more comfortable leaving my answer that way.

Q: I am a newly-employed 22-year-old. I have just started my 401k within six months. Will this greatly affect me and shall I do anything about it? - Jordan

A: I recall reading recently that there are more folks with PhD's living today than there have ever been, combined in the history of the world. In other words, the solutions to various problems can be solved with greater velocity and accuracy than ever-before. As for your situation, I'd sally-forth and make darn certain that I'm contributing the maximum allowable to your 401(k) plan. Should you only benefit from an "average" return, measured by the S&P 500, you'd probably realize a doubling of your invested funds every 7 years or so. Dips and peaks will without a doubt occur. Learn to accept and anticipte these to your benefit.

Q: In 1999-2000 people were saying--The Nasdaq hasn't crashed yet so it's not going to. In 2006 Lereah wrote--Why The Real Estate Boom Will Not Bust. Ironically, it already had. In 2007 many are providing reasons why the credit bubble will not bust. It already has. However, just like housing in 2006, the implications have not yet been fully felt. The party is over once the ability and willingness of banks to lend, or ability and willingness of consumers and businesses to borrow is exhausted. Those signs are in place today for all but ostriches. Can the Fed inflate out of this mess? - Todd

A: I'm unsure of your question. My recollection about inflation is that there are two basic kinds: cost-push and demand-pull. Unless there's a sizeable increase in consumption, we're likely to see prices rise and inventory sit idle.

Q: My husband and I have our funds distributed accordingly. We are 51 years old presently. What is your advise to us? 4 percent in Large to Mid Company Stocks. Comerica 500 Stock Index and Janus Growth and Income 13 percent in Foreign Global Stocks. Templeton Growth A 12 percent in Blend Funds. Van Kampen Equity and Income A 26 percent in Bond Funds. Dreyfus Intermediate Term Income Inv 44 percent in Stable Value Funds. Comerica Stable Value Thank you for your time. - D. Collier

A: In an earlier question, I pointed out that two guidelines are critical to your success: timeliness and suitability. Naturally diversification is another. While the purpose of this "answer board" is to give general guidance, giving you specific advice is impossible and for my part, illegal. "Know thy client" is the translation of one of the rules that I'm bound-by from the New York Stock Exchange. For you and future readers, please know that I cannot possibly shed light on your investing and actions unless you are my client.

Q: I am 64 and retired 2 yrs ago My life savings are invested in a mutual fund thru an investor. What if anything, should I be checking into. Do I ride this out? - Liz

A: In an early interview with your advisor, you should have discussed your personal time horizons for investing. Also, your tolerance for risk should have been considered when your account was established. While the current market action...it's volatility is sometimes unsettling, expect it. You may not like it, but its a natural part of securities ownership. Your advisor's office should be interested enough in your situation to provide answers to you in a timely manner. Also, you should have the opportunity to meet personally with your advisor at least on an annual basis.

Q: 3 times in 25 years, I have felt my money was not earning what it should. I did my homework, and then contacted investment people. Each time it was suggested that I move my money to them and it seemed to make sense. Through bad times, and giving up money to move it. I've barely got the $200,000 that I had in the early 1980. Now I'm 58. WHO can you seek advice from that won't just want you to move your money to their options? I need advice that doesn't represent anyone, but can lay out a plan. THANK YOU. - Who to contact

A: Professional consultation would be terrific if it were free. Your professional certainly took a big chunk of his or her life to learn their trade and within guidelines is entitled to charge for the service rendered. Although I know nothing more about you than you revealed here, your investment is substantial. At 58, your earning years are probably few. The ability to recoup losses at this point should be a high priority of your advisor...as should an acknowledgement of reasonable cost to you. An advisor who posesses a "series 65" license has the right to charge you for advice...but allows you to take that advice to any service that you select to place those trades.

(Tim Ragowski was not compensated for his time/services, and Newschannel 3 is not responsible for any of his financial advice).