If You're Still Scared Of Stocks, Think About This

Published Tuesday, July 21, 2009 at: 7:00 AM EDT

Due to several recent dips in the stock market, many individuals remain cautious and have steered clear of stocks. That’s a mistake.

In the aftermath of every bear market, many individuals swear off stocks. They resolve to never again be burned by the stock market. This is a natural reaction but not necessarily the smartest one.

People who steer clear of stocks could indeed be right, since no one knows when, or even if, stocks will rise to previous highs again. But people who stay out of stocks could miss a lot of upside if they rebound in the coming years. Again, no one knows. And that’s the point.

Because no one knows what will happen, you do not want to make big bets either way. You want to be in a position to participate if the stock market gains, but not in a position to lose too much. This is where your personal financial plan comes into play.

Your plan gets into the details of how much you can risk in stocks. Your financial plan plots a long-term course of moderation. It examines where you are now and where you want to go, and then strategically approaches how you can get there.

If you are still scared of stocks, it’s time to peek out from under the rubble, see how the landscape has changed, and analyze your situation systematically with the help of a professional. We’re here to help you.

This article was written by a professional financial journalist for Preferred NY Financial Group,LLC and is not intended as legal or investment advice.

An individual retirement account (IRA) allows individuals to direct pretax incom, up to specific annual limits, toward retirements that can grow tax-deferred (no capital gains or dividend income is taxed). Individual taxpayers are allowed to contribute 100% of compensation up to a specified maximum dollar amount to their Tranditional IRA. Contributions to the Tranditional IRA may be tax-deductible depending on the taxpayer's income, tax-filling status and other factors. Taxed must be paid upon withdrawal of any deducted contributions plus earnings and on the earnings from your non-deducted contributions. Prior to age 59%, distributions may be taken for certain reasons without incurring a 10 percent penalty on earnings. None of the information in this document should be considered tax or legal advice. Please consult with your legal or tax advisor for more information concerning your individual situation.

Contributions to a Roth IRA are not tax deductible and these is no mandatory distribution age. All earnings and principal are tax free if rules and regulations are followed. Eligibility for a Roth account depends on income. Principal contributions can be withdrawn any time without penalty (subject to some minimal conditions).

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