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Financial Conversations with Fitz #12 - Retirement With Equities - 3/31/2009

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Just a quick wrap up from the Ag Conference.  Lots of good information put into perspective.  The main theme is that market trends and profitability for ag customers—will still be suspect during 2009.  With all the wild swings in the worldwide markets.  Need to control own destiny with commodity trading and use of Revenue Crop Insurance….Be sure to run your own projections and understand them.  Not a great price picture unless we have a short crop. 

I have had another concern come up from our customers  frequently about getting out of retirement package because of the drop in value.  I am not a stock broker so none of my comments are meant to buy or sell stock, so I will just share my thoughts related to my experience and my own portfolio.  Most of the these customers have money in mutual funds or some mixture of market related investments.  History has shown that way too many people buy high and sell low during a market cycle.  I can remember this happened in the 60’s and people were getting out in late 70’s at the bottom.   The market went up and down twice since then.  This happened again in 2000.  The market index was at a high.   The largest amount of dollars going into markets.  The bottom was in third quarter of 2002 people were busy taking money out.  The first quarter of ’04 was high flow into markets because they were going up.  In the 4th quarter of 2008 market is going back down. … People taking money out.  If you take out now with the low market you will lock in your loss.  I figure for each $10,000 I have in the market it is probably worth about $6000 currently.  If I am at a $1/unit it doesn’t take much of an increase/share to show a good increase.  If I am still putting money in I am buying  my shares at 60 cents instead of $1.  This is called dollar averaging.   When the market goes back up I will be gaining on one and a half times as many shares on the ones I purchased last.  If I take my money out right now the other markets are quite low also, but won’t change in value, so it will take a long time to go up.   I don’t plan on using my retirement for a while and when I do I will take out of the cash portion before I do equities.   This should allow for them to grow.  Our economy has done this 34 times since 1929. 

Whatever you do, do not take out of your retirement without talking to a financial person that does not have a vested interest in your transaction.  Our people would be glad to review your situation if you have any questions.

Remember that you should deal with people in community banks and organizations  that when they put something together for you that they will  be sitting with them at ball games, church or community events.  So, if in doubt give us a call.