Earn What You Spend

A great, reassuring article for personal investors in what is certainly a troubling time.  My two favorite questions/answers below.

First, what happened??

Q. Why did the stock market fall so far so fast on Monday?

A. The element of surprise surely didn’t help, since everyone was expecting the bailout bill to pass. There may have been a bit of investor disgust thrown in, too, a sense that our representatives in Washington just don’t get it.

Fear may be the biggest driver, however — the worry that it may be weeks or longer before companies can get the affordable, short-term loans they need to finance their operations. Without easy access to that money, it’s hard to run a profit-making operation on a day-to-day basis, let alone grow over the long haul. The professional investors who often drive big market moves don’t want to hold onto stocks to see if things will really get that bad.

And next, is anything safe?

Q. Is any investment truly safe right now?

A. As long as you trust the United States government, sure. Plenty of banks, like HSBC Direct and Capital One are offering online savings accounts paying more than 3 percent. These accounts have all the normal Federal Deposit Insurance Corporation protections of at least $100,000. Also, the Treasury Department is currently insuring investors who had holdings in money market mutual funds as of Sept. 19, as long as the fund company pays to participate.