Your Nest Egg May Need An Emotional Rescue

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MarketWatch

December 7, 2009 Monday 1:03 PM EST

SECTION: PERSONAL FINANCE; Personal Finance Daily

LENGTH: 1089 words

HEADLINE: Your nest egg may need an emotional rescue

BYLINE: MarketWatch

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The reason the you make out a game plan well before your team takes the field or write a last will and testament long before you think you’ll be on your deathbed is because drawing up those documents when you are not in the heat of battle or the last stages of life allows you to stick to the strategy you really wanted to follow without letting blind emotion color your judgment.

The same thing should be true for your investment game plan: You should draw it up well before you place your nest egg in the crucible of volatile markets in order that you don’t pull the plug prematurely in bad times or take giddy risks that endanger your financial life when stocks are soaring.

The best financial planners are asking their clients to make these sorts of plans these days, given the wild emotional swings they have witnessed in the last year or so. The idea is that having a document you know you agreed to in peaceful times will ease the strain. The idea is a good one, whether you employ a financial planner or not.

Smart folks who study investor behavior say emotional decisions more often than not sabotage portfolios. So unless you’re Mr. Spock, it makes sense to get some help in controlling those emotions.

— assistant managing editor/personal finance

INVESTING

Keeping emotions in check and portfolios on track

The retired couple met with Scott Kays in early March as the stock market continued to slide, in need of emotional support as much as financial help. They’d been burned in the meltdown and were ready to sell everything. Kays was sure that would be a mistake, but he didn’t come down hard. “You don’t sit there and say, ‘It’s nonsense for you to feel this way,'” the Atlanta-based financial adviser explained. “I’d think something was wrong if they weren’t scared.”

Dubai debt crisis dents emerging-markets ETF euphoria

Investors have piled into exchange-traded funds that track hot-performing emerging markets, but the tremors from Dubai’s debt woes are a clear warning of this volatile sector’s risks. Moreover, it shows there’s no guarantee that governments in developing nations will bail out troubled companies.

Hoping that fund investors get more for their money

Dear Mutual Fund-Company Top Dogs: The last two years has felt like the worst of times and the best of times for your shareholders, with many of your issues taking them from famine to a feast that hasn’t quite filled the void and leaves them hungry and hopeful for more.

TCW to buy Met West; CIO Gundlach ousted

In a deal that shakes up the clubby world of bond investing, the TCW Group, a $110 billion fixed-income giant, said late Friday that it would buy rival bond manager Metropolitan West Asset Management and had fired its well-known chief investment officer.

Why changing a CEO may not change a company

How much of a difference should investors expect when General Motors — or any company — brings in a new chief executive? Not much.

Despite recession, Sysco stock keeps cooking

The recession has taken a big bite out of the restaurant business, with fewer Americans eating out these days.

Bittles says market is on bulls’ side

“December can be very frustrating,” with a lot of churning and not much movement either way, says Bruce Bittles, the chief investment strategist at R.W. Baird & Company. But he says the calendar is still on Wall Street’s side. “Stocks do best from November first through April 30, and that’s one reason we feel the path of least resistance is on the side of the bulls.”

CARS

2010 Ford Mustang GT: It’s the V-8 that will grab you

It is one of Ford’s more popular colors — the Grabber Blue that this weekend’s test car, the 2010 Mustang GT, showed off to the world. While the brilliant blue turns heads wherever you go, the wonderful V-8 will grab the attention of those who like to drive.

HEALTH CARE

Reacting, and overreacting, to new mammogram guidelines

Call it a perfect storm. This isn’t the first time medical experts have wrestled with whether women in their 40s see more of a benefit in catching would-be lethal breast cancers from their annual mammograms than harm in the form of unnecessary radiation, anxiety and overtreatment when the tests turn up a significant amount of false positives. But this is the first time revised guidelines have emerged when U.S. lawmakers are trying to retool the health-care system to make it more efficient and less costly over the long term, and when women are demanding their fair share of health care after suffering from discriminatory insurance practices for years.

FAMILY FINANCE

Before heading to the mall, read this

Contemplating a trip to the mall this weekend? Stop right there and step away from the plastic. With unemployment still high and salaries in suspended animation, few people are going crazy on holiday spending this year. But even those planning to spend modest amounts should take some time to think about what their shopping budgets really buy, and who really benefits from Christmas gifts.

RETIREMENT

Beware these retirement-planning missteps

We all make mistakes. The key, of course, is catching them early and correcting them before the damage is irreversible. Retirement planning, with all its moving parts — finances, families, health care and legal issues — presents lots of opportunities to get things wrong.

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New tax rules are about to give more people access to a Roth individual retirement account, one of the most effective vehicles in which to accumulate money for retirement or heirs.

Paying taxes after a Roth IRA conversion

In 2010, when the income limits are lifted for converting a traditional IRA to a Roth IRA, my wife and I plan to convert about $50,000 in traditional IRAs. We plan to pay the taxes with funds from outside the IRA and also to pay them all in the 2010 tax year. Our question is this: At what time during the 2010 tax year are the taxes due?

REAL ESTATE

Luxury lost in Anguilla

Buyers at Temenos Residence Resort in Anguilla paid seven-figure prices for a pristine location and top-line amenities. Even “The Da Vinci Code” author Dan Brown invested here. But construction has stalled, leaving buyers in the lurch. Kris Hudson reports.

TECHNOLOGY

Instant photos with Fujifilm’s Instax

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