Transcripts

"Money File"-Finding Balance In Volatile Times

SUSIE GHARIB: In the "Money File" tonight, the benefits of a balanced fund in a down market. Here's Gail Marks Jarvis, personal finance columnist at The Chicago Tribune.

GAIL MARKS JARVIS, PERSONAL FINANCE COLUMNIST, CHICAGO TRIBUNE: If you are saving for retirement and you've been asking yourself each day, should I stay in the market or get out? You might like a simple solution, a compromise. It should take some of the sting out of the stock market. Consider a balanced fund. It allows you to have about half of your money in the stock market and half in bonds. If you had put money into the average balanced fund at the beginning of this year, you would have lost money, but only about half as much as you would have in the stock market alone. And what about the future? There are no guarantees, but the last bear market offers a clue about how balanced funds can hold up. You'll recall that between 2000 and 2002, investors in the stock market or the Standard & Poor's 500 lost about half their money at the worst point. So $10,000 would have turned into about $5,000. It was one of the worst losses since the Depression. Still, consider the contrast with a balanced fund. If in 2000, you had put $10,000 into a balanced fund you would have lost only about $2,000, and recently you would have had about $12,000. Not great, but a lot better than an all-stock market investment. With that, you'd be roughly where you started more than eight years ago with about $10,000. I'm Gail Marks Jarvis