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Investing Guide 2008
Tough times actions
Here are some investing suggestions that can help you get through the tough times.
Tough times actions
Investing ideas aggressive and conservative
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 Invest per your age
Bellevue, Wash.-based Certified Financial Planner Lee S. Martin recommends clients invest based on their age. He says to take your age and that is how much you should have in bonds and cash investments.

If you are 60, have 60 percent in bonds and cash, and the rest in stocks. Or if you're 30, by this strategy, you should have 70 percent in diversified stock.

People often move toward a conservative position as they age

"Most people tend not to be able to tolerate as much risk in reality as they might think in their own minds," Martin says. "This (strategy) keeps the average (person) more likely to stay invested in a volatile market rather them moving out of 100 percent stock position to cash based on pure emotion."

This strategy also makes you constantly rebalance your portfolio regardless of market conditions.

"People often move toward a conservative position as they age, wanting to preserve what they have built up," Martin says.

 Good time to buy bonds
Municipal bonds will produce good tax-free yields while "you're sitting on them," Charney says. "ETF (exchange-traded funds) municipal bonds are selling at 90 percent of what a taxable Treasury bill is selling, and yet they're tax free."

Charney says everybody is scared of bonds right now.

"You want to go the opposite direction where everyone is scared," he says. "If you're staying in the investment grade municipal bonds, I don't think there's any concerns on that at all."

Convertible preferred stock or convertible bonds are "an interesting place to be at this time, because when the market takes off, a convertible bond or convertible preferred stock can be converted into the company's common stock," Charney says. "You could buy a (convertible bond) and if that underlying stock goes up, there's a conversion factor; you can actually convert it over. ...

"So the market stays low, it's going to act like a bond and not really take the big hit. It'll take a little bit, but not a big one. And then if the market takes off, which I think it will, then you make money on the upside. It's kind of playing both sides of the game."

Definitions
Diversification -- A method of investing that aims to minimize risk and increase return by spreading money among a variety of assets.
Risk -- The probability that the return will be less than expected.
Convertible preferred stock -- Preferred stock that can be converted into a specified amount of common stock at the stock owner's option.
Convertible bond -- A corporate bond that can be exchanged, at the option of the stock owner, for a specific number of shares of the company's stock.
See the Guide's Glossary for a further explanation of these terms.
-- Updated: July 8, 2008
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