COVERITLIVE.COM

10:30

Kim Quillen, T-P - Good morning and welcome to today's online chat with John Gin. Feel free to begin posting your questions now. John will begin answering them at 12 noon.

11:58

[Comment From Mary Gambino]
John, with so much news about businesses going down and people losing their jobs, what advice do you have for a person to stay upbeat during this time?

12:08

John Gin - Mary, it's a great question during these troubled times. For me, I go back to the basics and add up all the things in my life that I am thankful for: my family, friends, clients, co-workers, my health, etc. Without these, life will have no meaning. Go and give your family a hug, call your best friend, hug your pet/pets. Doing these things will offset the negative news that surround us.

12:09

[Comment From Jen]
What is the best strategy for those of us who are trying to manage our money during these tough times? Should I consider selling investments? Are there certain sectors I should be investing in?

12:18

John Gin - Jen, the best investment you can make right now is to invest some time and effort to get educated about the role of financial planning in you life. Too often we tend to take notice of a TV commentary or advice over the radio and act upon it. To really get it right, you need to look into getting a plan tailored to YOU. Your first step is to go online and read as much about financial planning as you can. Once you get a handle, the answers to your questions becomes more evident.

12:19

[Comment From Bill C]
How long do you see the recession lasting, and how does that impact retirement planning?

12:29

John Gin - Bill, we are already very deep into this current recession. A typical recovery takes place about 14 or so months once the recession starts. By that account we should be see some signs of a recovery now. However, this recession is very different and stubborn from past recessions. I suspect that the recovery will take much longer than a typical recession. The impact on retirement planning is that for those who are thinking of retirement, you will need to push the timeline back. For those of us who are retired, you will have to change your lifestyle by spending less, saving more, and you may have to go back to work.
On the positive side, once a recovery starts taking place, the stock market tends to move upwards in very short and unpredictable bursts. The enormous amounts of cash and cash equivalents will fuel the recovery. You have to stay invested during these times to capture these returns.

12:29

[Comment From David]
John, relative to long-term care policies, should we buy them? We're both in 50's, same-sex couple. BTW, thanks for your article in TP some time back on trusts, wills, Living Wills, and powers of attorney for same-sex couples - you helped motivate us to get those things done !

12:34

John Gin - David, now there is even more reason to consider long term care. With the decline in the stock and bond markets, the shrinkage in our portfolio that we thought will alllow us to self insure for long term care will now have to be revised. Shifting the risk of long term care to an insurance company makes more sense now than ever.

12:35

[Comment From Finance Student]
Hi John-With the current proposed government spending packages and bailouts out there, do you think the prospect of an inflation spike is imminent in the near future? How should we factor this in our required rate of return when investing for retirement?

12:45

John Gin - Great question, Finance Student! I think the prospect for an inflation spike is possible rather than imminent. Currently we are experiencing deflation, not inflation. We do not want prolonged deflation because that will mean a more serious recession. Remember that the way business is conducted on Wall street, consumer behavior, more government oversight, etc will change. The way of life as we know it going forward will be different. We need to carefully monitor the money supply and be prepared to tighten fiscal policy quickly if we see inflationary signs.
I would lower the expected rate of return when investing for retirement. We will not be able to use leverage to goose up profits as we have in the past.

12:46

[Comment From Ann]
I recently accepted an involuntary termination package and received my retirement funds as a lump sum. I transferred that money to a traditional IRA because I wanted a safe investment from which I could draw monthly income. I'm now being told I should do something differently to get more interest to extent my funds. Can you tell me if there is something else I can put my money into from which I can draw a monthly income and receive a higher interest rate than traditional IRA? Thanks

12:59

John Gin - Ann, your situation is fairly typical when someone retires (voluntarity or involuntarily). From a retirement planning perspective, I would like to know what target rate of return you would need on your IRA to reach your retirement income goal. There are no free lunches in the investment world. You will have to balance the risks with the rewards in your IRA portfolio with a diversified mix of cash, bonds, and stocks. I would shy away from investing in one investment that has a high yield or dividend payout. There is too much uncertainty and risk in the markets to not be diversified. You should consider 3 buckets of investments in your IRA: a cash or money market portion where you will get your monthly income, a second bucket in various kinds of bonds where the income will sweep to the cash bucket, and the third bucket in stocks (you can also direct the dividends to the cash bucket). These three buckets will provide you with short term cashflow, consisten income, and longer term growth potential.

1:00	[Comment From rachael] My husband has 16K left in his 401k, we have lost about 2k monthly since August last year. Do you think we should remove whats left now? or leave it?

1:12

John Gin - Rachael, being successful in investing for the long term requires skills that don't come easily. They can be taught, but the best way to learn them is by on the job training. The skills that you are learning are: 1) discipline. By continuing to dollar cost average into your 401(k), you are buying more shares as prices come down. 2) Focus on your long term goal-Ignore your emotions to sell out in the short term and stay the course. 3) Market declines are a natural part of the investing process-Make sure your have other money that is in cash or safe to access for your normal cash needs. Match the right type of investment to the time frame of your goal (cash for short term and stocks for the long term).

1:13

Kim Quillen, T-P - This concludes today's online chat with John Gin. Thank you for participating. And special thanks to John for coming in and hosting this chat. Be sure to catch John's weekly Money Watch column, which appears each Tuesday in The Times-Picayune Money section. For a recent archive of John's columns, go to www.nola.com/business.

1:14

Page 1