Today on MoneyLife

MoneyLife host Chuck Bentley tells listeners that the ministry has been getting a lot of questions from listeners concerned about the stock market and their mutual funds.

Listeners want to know if they should stay in mutual funds, and if so, which ones. Ninety-six million Americans own mutual funds for retirement, college funding, and building wealth to leave an inheritance.

Crown has a long partnership with Sound Mind Investing and after the break, Chuck will talk with Mark Biller from Sound Mind Investing to get a biblical perspective on the current stock market woes.

Chuck introduces Mark Biller. Mark says part of the market decline is investors concern about the fundamentals of our economy and whether it is headed for a recession. When investors don’t think the economy is growing, it hurts the stock market.

The market is also being hurt by fear and uncertainty. People take their money out when they can’t clearly see where things are going. There is more business reporting about the market ever before and much of it overstates the problems. This contributes to the intensity of people’s fear and uncertainty.

The Dow Jones Industrial Average is one of the oldest measures of the stock market. This index tracks the movement of 30 of the largest companies that best represent the economy.

In the 1973-74 bear market, stocks declined 48%. In October of 1987, stocks dropped 22% in one day. During the bear market of 2000-02, stocks went down 48%. We've been in a bear market for about a year now and stocks are down 33%. It's significant but not the worst ever.

If you get out of the stock market now, you’ll lose at least 33% of what you had invested. You'll also lose the opportunity to benefit when the market does bottom out and comes back up. When the market turns around, there tends to be some significant gains quickly. For example in 2003, the market went up over 30% after the bear market of 2000-02. It's very risky to take your money out this far into a bear market.

Asset allocation has to reflect your season of life. Someone near retirement shouldn’t be invested in stocks 100%. Investors with 20 years until retirement have a lot of time for their portfolios to come back. Your portfolio has to reflect your risk tolerance. Many people are learning their risk thresholds through the current market.

Stocks carry more risk than other investments. You can have a couple levels of diversification. One level is between stocks and bonds; the second is within each group.

With stocks, you want to have a blend of mutual funds that invest in both large and small companies as well as some foreign companies. With bonds, you want to have some short-term and intermediate bonds. Good quality index funds that track each group can be a good way to go.

None of the money and possessions we have are really ours, they belong to the Lord. Invest with a plan for the long-term. It's best do it when you’re calm and not fearful. A written plan can give you encouragement during a time like this.

Chuck says he’s an investor and he understands the emotions other investors feel when they see the market falling. He wants to protect the resources he’s been given. Mark was a calming voice that reminded us that God owns it all.

Chuck says at a convention of financial planners recently that the consensus response to people about the stock market should be to stick with your investment plan and rebalance as necessary, cut your spending, watch your income and protect it, and don’t panic.

None of that is out of line with God’s Word. God’s financial principles teach us to count the cost, get on a spending plan, live within our means, do all that we can to earn a living, and never panic. God is in control no matter what the stock market does.

Having Time On Your Side Puts You In Control

Even after the bear market of 2000-2002, the stock market has returned, on average, about 12 percent per year since World War II.

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Long Range Investment Goals

As people consider what to do with their money, they need to think about where they want to end up financially.

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Make Sure Your Decision Making Is Inside Out

For many investors, the starting point is found in the "outside" world of current events, magazine articles, and brokers' recommedations.

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Investing In Mutual Funds

There have never been more stock and bond investment opportunities, but deciding which stocks or bonds to buy has never been more difficult.

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Other Resources:

• ABCs of Money Package
• Career Direct
• God's Principles for Operating a Business
• Business By the Book
• Crown Mvelopes