Dan Celia

Financial Issues

May 2016 – Q: I am concerned about my investments and wondering if I should pull out of the market at this time.

A: It is not necessary to take everything out of the market. However, for a number of months I have been advocating a fairly significant position in cash – 50% to 60% of your portfolio. Cash is a money market account or a CD – not anything else. Overall, my advice is to have a mentality of preserving your principal.

I think the markets will continue to be volatile in the foreseeable future. Therefore, I suggest that you review your mutual funds or stocks. Then, in order to create more cash, sell the ones that have a significant profit.

Even though you will have to pay capital gains tax, I think this strategy will serve you well in the next 12 months. If things look like they are going to turn around with some certainty, you can always reinvest in the market. This is what I would suggest as opposed to pulling everything out.

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Dan Celia has been in financial management for more than 30 years. He works closely with AFA Foundation and can be heard six days a week on AFR Talk (afr.net).

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Email: [email protected]
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