If you have been paying attention to the stock market lately, and it's hard not to, you've probably become a bit concerned about the state of your retirement account. The Dow Jones Industrial Average closed under 9,000 today. Ouch! The most recent estimates are that retirement accounts have recently lost some $2 trillion. That trillion...with a "t". That's a lot of money.

So, is it time to bail on the stock market and stash your cash under a mattress? The answer is: it depends. As I have mentioned before, I have been snatching up as much stock as I possibly can lately. Why? Because it's cheap, and it will be a long time before it is this cheap again. Is it a gamble? Sure, but I'm betting that companies like SiriusXM, Walmart and Johnson & Johnson aren't going to go out of business anytime soon.

How do you determine the best place to park your retirement funds while the country is seemingly spiraling toward a depression? Here is my rule of thumb:

1. How soon do you need your money? If you are in your 20's or 30's, forget about selling off your stocks (unless you own AIG). You've got a good 40 years or more before you need to start living off your 401k or stock dividends. If you sell now, you'll just lock in your losses. If you are in your 50's or 60's, things are a little more pressing. You'll still want to own some stocks, but you want good, strong companies in your portfolio. This isn't the time to risk your money on a new company. You'll want more of your money in safer investments like bonds, or park your cash in an FDIC insured savings account. Certificates of Deposit are also FDIC insured, too...and you get better rates than a regular savings account.

2. Are you diversified? If all of your money is tied up in one stock, that's not good. Remember the poor folks who lost all of their money when Enron went belly-up? You'll want to spread your money around amongst large cap companies, small companies, and some foreign investments, as well as some stable-value funds.

3. Automate your investments. Not sure which stocks to buy? Park your retirement money in a fund geared toward your expected year of retirement. Fidelity has their so-called "Freedom Funds". If I were to purchase one for my expected year of retirement, it would be the Freedom Fund 2035, for example. As you get closer to your retirement date, your fund automatically readjusts itself to minimize risk. The farther you are from retirement, the more stocks there are in your fund. As you get closer, it readjusts to include more "safer" investments like bonds.

4. Climb the CD Ladder. As we mentioned earlier, most CDs are FDIC insured. You can purchase a series of CDs so that six months or a year from now, you can start cashing them in each month and either purchasing a new CD, or taking the cash plus interest. The CD's with the largest denominations and the longer time periods pay the most interest, usually 3 to 5 percent. Make sure the CD is FDIC insured.

5. Cash is King. Hoarding a certain amount of cash is still a good idea. You can spend it right away and it doesn't lose value like stocks do. Whether you put it in a safe or stick it in an FDIC insured savings account, you'll have a good cushion to fall back on when you really need it. Most people say have several months worth of living expenses set aside. I say you have to start somewhere. Start with $500 and work your way up to several thousand dollars. Use it for emergencies only.


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