Financial Pros Answer Your Top Questions

Winterhalter: "Trying to move in and out of the stock market (market timing) is generally not wise. It is very difficult to know the best time to sell stocks, and once you've done that it is difficult to know when to buy stocks again. Many people end up doing nothing, because they are paralyzed by indecision. It is better to have a plan and stick with it. Keep enough emergency cash available to meet at least three to six months worth of your living expenses in an account that is easy to get at (such as a savings or money market account). Next, come up with an investment plan that you feel you can stick with in both up and down markets."

Hutchins: "Following crises-induced panic selling, stock markets tend to rebound in an explosive manner. This makes it unlikely that you will be able to re-enter the market quickly enough to participate in much of the recovery. You will likely have converted temporary paper losses to permanent real losses. You may find your easier sleep today coming at the expense of sleepless nights during retirement."

Q: Are annuities a good investment choice right now? Does the government bailout of AIG affect my AIG annuity?

Hutchins: "Annuities are contracts in which you turn your money over to an insurance company, and the insurance company promises to return it plus some predetermined rate of return, which may be based upon interest rates, market indices or some combination of the two. Your money, therefore, becomes the insurance company's money. If they go belly up, so can some, much, or all of your annuity. That is one risk, [but it is] alleviated if the government comes to your insurance company's rescue. ... The primary benefit annuities offer is tax deferral, and the ability to convert your savings into a guaranteed (assuming the insurance company remains solvent) stream of lifetime income. The higher your tax rate, the more beneficial is an annuity from a tax perspective; and the higher interest rates, the larger the lifetime income you can lock in, [but] historically speaking, both income tax rates and interest rates are low so annuities may not be a particularly attractive investment option at this time."

Brendan McNamar, founder, WiseWealth Inc., Mesa, Ariz.: "Your AIG annuities are safe. AIG bought high-quality bonds to match the obligation to you when you bought the contract. These are separate from the parent company's financial problems. Annuities are not attractive during times of low interest rates. You have to pay a lot for a little income. They are more attractive, for part of your portfolio, when interest rates are higher and are expected to move lower. They should always be bought directly from a company like Vanguard or Berkshire Hathaway, with no sales person."

Q: What do the bank mergers -- JPMorgan Chase and Washington Mutual, Bank of America and Merrill Lynch, Citigroup and Wachovia -- mean for average bank customers like me?

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