Plummeting stock market impacting retirement funds
How will the Dow Jones industrial average drop by more than 500 points affect your "nest eggs?" WRAL News talked with retirement experts about the impact.
Posted — UpdatedThe Dow Jones Industrial Average lost more than 500 points, more than 4 percent, the most points the market has lost since it reopened after the Sept. 11, 2001, terrorist attacks. About $700 billion in value evaporated from retirement plans, government pension funds and other investment portfolios.
“This has the elements of a full-blown panic,” financial consultant Jeffrey Miller, with Raleigh-based Armor Investment Advisors, said.
"They don't wanna be 60 years old, looking to retire and not have any money there,” he said.
You "may want to think about pulling out. We do not know how low the low is going to be,” Walden said.
Miller said that for people with money to spare, it is a smart buyer's market. Stock shares of good companies are priced cheap.
“Fear and turmoil and all of this creates opportunity," he added.
Charlotte-based Bank of America took advantage of Merrill Lynch's plunging stock. Merrill's shotgun sale to BofA will create the nation's largest financial services company.
The deal keeps Merrill from a Bear Stearns-style fire sale or a complete meltdown like Lehman Brothers while removing a major player that some expected to be the next shoe to drop in the credit crisis. At the same time, it will enable BofA to expand the financial services it offers to its already huge customer base.
"And that is very significant because financial services to North Carolina in the 21st century is what tobacco was to the state in the 20th century,” Walden said.
Miller said that is why he suggests his clients diversify their portfolios. Walden said he thinks there will be substantial improvement in the stock market by next summer.
It was by far the most stomach-churning single day since this financial crisis began to bubble up from billions of dollars in rotten mortgage loans that have crippled the balance sheets of one bank after another and landed mortgage giants Fannie Mae and Freddie Mac under the control of the federal government.
The American people should remain confident in the "soundness and resilience in the American financial system," Paulson told reporters at the White House.
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