Sarah Barnett has been thinking since this summer about starting a long-term investment plan, but Wall Street’s wild ride has left her unsure of what to do.
“Dealing with the uncertainty is the hardest part,” said Barnett, a 38-year-old doctor who put off investing until she finished medical school, residency and a fellowship. “I think folks can deal with anything as long as they know what it is - but I don’t think anyone knows what this is.”
Financial planners say they’re getting calls from clients like Barnett who want to know what the heck’s up with Wall Street.
The subprime-mortgage meltdown has blossomed into a major credit crisis, slamming insurance giant AIG, brokerage house Lehman Brothers and other big firms.
The nation’s oldest money-market fund also “broke a buck” yesterday, dropping its net asset value to 97 cents a share instead of the usual $1. Money-fund shares traditionally never fall below $1 apiece, making them almost as safe as traditional bank accounts.
“The calls and e-mails I’m getting are basically: ‘What do I do now?’ ” Wakefield financial planner Deb Maloy said.
Newton financial adviser Rick Fingerman said the clients he’s heard from “are either ‘Chicken Littles’ who think the sky is falling, or people who say: ‘I’m a long-term investor, so I’m not worried.’ ”
Fingerman and Maloy say the last thing investors should do is dump stocks, unless clients are close to retirement and can’t risk a potential multi-year downturn.
“I tell my younger clients: ‘Look, it’s 20 years until you retire, and when you do, we’ll look back at this and realize it was a non-event,’ ” Fingerman said.
Maloy added that consumers needn’t worry about stocks, mutual funds or annuities held with firms like Lehman, which declared bankruptcy Monday. After all, brokers keep investors’ assets in separate trusts exempt from bankruptcy actions.
Similarly, state Insurance Commissioner Nonnie Burnes yesterday said people who have policies with AIG can rest easy. Burnes said AIG, which received an $85 billion Fed loan yesterday, and subsidiaries like Boston-based Lexington Insurance Co. “are solvent and have the ability to pay claims.”
