The U.S. stock markets are having a star-spangled week heading into the Independence Day holiday, as Reuters reports in “Dow, S&P end at records in fireworks before the Fourth.”
With headlines ablaze about major indices hitting never-before-seen heights, you might want to find some local angles to the Wall Street news.
First, it’s always interesting to muster up a big chart or graphic illustrating the year-to-date (or post-recession, or since-2006) share price performance of area companies. You can limit your list to companies headquartered in your area, but I’d suggest also including big local employers regardless of where their corporate seat is located. If your region is home to an airline hub, or an auto plant or a big resort operated by a household-name corporation, chances are its workers may hold its shares in their retirement plan and so might unrelated investors.
The big question on readers’ minds is, “What do I do now?” Quite a few pundits are predicting that stocks – which have more than fully recovered since the recessionary market depths – are due for a big chill. The Dallas Morning News says “Bull market may be entering final stretch” and one of Forbes’ contributors is posting the dire “23 charts (that) prove stocks are heading for a devastating crash.”
I’ve never thought newspapers and weeklies should dabble in providing investing advice; the best you can do is direct readers to objective advisers (like fee-only, non-commissioned financial planners) or, if they can’t afford that, to relatively tried-and-true strategies like dollar-cost-averaging through employer-sponsored retirement accounts, or the Roth IRA at low-cost entities like Vanguard.
“If I haven’t been investing
in stocks, am I too late?
Is it a mistake to “buy high” ?”
You might be surprised at how well a basic glossary of terms would be received by your audience; there’s a whole crop of people out there who over the last eight years have ignored markets but now are intrigued by the soaring numbers. Even terms like “S&P 500” and “Dow” are a mystery to some, let alone the difference between taxable and tax-sheltered accounts and specialty items like the Solo 401(k) for individuals and self-employed people.
Why not offer, at least online, a primer in basic investing terms. And then enlist area certified financial planners and others to answer two basic questions for readers:
If I haven’t been investing in stocks, am I too late? Is it a mistake to “buy high”? It’s the rare financial adviser who will tell anyone not to invest in the market, but at least you can ask them to offer answers based on a variety of potential scenarios; a 25-year-old may want to go all-in on stocks given her 45-year time horizon; a 45-year-old might want to consider other options.
Don’t forget to make the point that a company match, if available, is a pretty good rate of return no matter what the general market does. And most people who say they “can’t afford” to invest in a 401(k) or similar vehicle will find that they can contribute 3 percent or 4 percent to a tax-sheltered defined contribution account without really affecting their take-home pay, because of the tax savings. Run those numbers on hypothetical wages or real readers’ paychecks and, in a nice big chart, show people that there may be more room for savings in their budget than they realize. (If they’re squeamish about stocks, 401(k)s offer other places to stash savings, like bond funds and cash accounts.)
I gritted my teeth and held on, and even kept contributing, through the depths of the recession and the slow recovery. Now what do I do with my gains? Again, the answer depends on age, the individual’s lifestyle plans, other income streams, tax liabilities and so on. Conjure up some scenarios for people in various demographics – or invite readers to submit real-life dilemmas – and ask financial pros to weigh in on when to cash out, and how. Rollover IRA? And where should the money go – to a safe but non-paying money market account, or an index fund, or bonds, or what? Should people use gains to pay off debt or a mortgage?
What are the key questions planners are hearing from clients, and what are the variables that affect their advice?