Getting Out At The Wrong Time
Lisa is worried about her son's educational savings account tanking, and thinks she should get out now. Dave thinks otherwise.
QUESTION: Lisa has a son who will graduate in a year and a half. He has an educational savings account and a mutual fund, but they have lost money. Since they have taken such a hit and he’s about to go off to college soon, should they move either to another investment?
ANSWER: I would not move it. If you sell a mutual fund today while it’s valued at half, you have locked it in at half. I could be wrong, but it could recover. I haven’t pulled any out of my mutual funds. Don’t miss the good things that will happen in the next 12 or 24 months. It’s a good time to be investing now, and to pull your money out is to dis-invest. It’s scary to see your reduced numbers, but pulling it out will guarantee is stays valued at half.