Monday, August 29

Central Bank buys bonds for Italy, Spain

ANN CURRY, co-host: this morning on the today's money, to protect your retirement. Many Americans are concerned in view of recent dive on Wall Street and the first ever to downgrade credit rating the Government. What does it mean for all of you? Now, Farnoosh Torabi carries on Yahoo! Finance and also the author of "psyche himself rich." Farnoosh, good morning. Mrs FARNOOSH TORABI (author, "Psych is rich"): good morning, Ann

CURRY: how is the question that I think a lot of people are calling for now as this downgrade is their personal savings, their portfolios? Is there a simple answer?

Mrs TORABI: Well, that's the economic answer to downgrade to debt to us, is on the Government level, at the level of consumers on the main street mean higher interest rates on consumer credit, car loans, your credit cards mortgages down to drop. Theoretically, these interest rates could rise following a downgrade. Thus put personal savings under pressure, because the more you have to pay to borrow, the you can less you want to save.

CURRY: But we have no idea, how much they, may go in view of the fact that the two other agencies, credit rating agencies have not actually lower currently and also... Mrs TORABI: Right.

CURRY:..... .because the White House argument, that in fact S & P is actually a bug, a $2 trillion mistake made.

Mrs TORABI: Right. CURRY: is I mean, it doubts about how much, or even, if the interest rates will rise?

Mrs TORABI: sure. Well, that's a good point. It have to do only an agency, which now is we have downgraded US debt, the consequences will be not so difficult. I don't think that we go to see interest, prices to explode. But here is the other thing, Ann, this downgrade it unprecedented is. It has added uncertainty in financial markets, so that we increase prices for everyday goods can see because companies want to have to the kind of pre-emptive strike against what may be the worst on the road from an another recession is happening. So we will see, can increase prices on oil, gas, food, clothing, ultimately personal savings can be affected.

CURRY: So are you really say that while we do not know that we should protect ourselves really, it sounds like what you're saying. Mrs TORABI: absolutely. You can't control what is happening in DC, but you can specify that your ability to save money.

CURRY: OK, talk to save you money. Our 401 (k) s wife TORABI: Yes. CURRY: Those of us who are lucky enough to have it, what can we do?

Mrs TORABI: You want not to emotion-driven knee-jerk movements in your 401 (k). Keep in mind that a long-term investment vehicle, the right is your 401 (k)? And as long as you are diversified, you have a risk-adjusted portfolio, which means that your portfolio speaks, your age and if you want to go to retire. This is really important. I think everyone should be a moment and see how their distribution is distributed. Make sure that when you young, you know you can afford more risk. You should be on the market. If retirement approach to, you're in your 60s, more in the direction I fixed-income investments, like bonds, CDs call you want to, be associated with, because you the guesswork of the return on your investment.

CURRY: So they are less likely vary is what you're saying.

Mrs TORABI: Yes. Yes. CURRY: How is that a safer bet. So depending on how old you are, how quickly you need your money...

Mrs TORABI: Right. CURRY: ….. .then you can decide whether you can move your money and choose some of these want safer places to go. Mrs TORABI: exactly. Once a year I think is a good time to check. It could be. CURRY: definitely. Mrs TORABI: in any case. CURRY: OK. How much should people stay out of this market, but think?

Mrs TORABI: Mm-hmm.

CURRY: I mean, some people will say, 'Hey, this could be chance", other people who say, 'are you crazy?' Art Mrs TORABI: Right.

CURRY: I would think that upturn - what your best advice, about the average American?

Mrs TORABI: I would say, you think about your five-year plan. What objectives you want in the next five years taken, whether it sends your kids to school, a House to buy, starting a business. Do what the price tags that are associated with these objectives and sure what must also always money, you reach these milestones, you take it from the stock exchange since five years, is not truth be told, enough time to really the volatility, to lose the money. Five years, which I think is a long enough time to progress to all these losses in order for you with your life to scoop.

CURRY: So this is a good rule of thumb.

Mrs TORABI: Yes. CURRY: Now, you know, it seems as if we all hear these experts, you know, Web - on CNBC...

Mrs TORABI: Mm-hmm. CURRY:..... .or just type von-- and analysts in General seem kind of get you a clue they know that the market goes, diving or not...

Mrs TORABI: Right. CURRY:.. .depending up - what is the best advice you can on average Americans like to know if things be not so good?

Mrs TORABI: Well, I think that even the best investors do not really know on a daily basis. But this is something that wirklich-- I have this in my book wrote, recessions, Ann, happen approximately every five to six years.


Mrs TORABI: look back on as early as 1797, the great panic, as our country went into a credit crisis along with England. Had since then we have again every five to six years, kind of a recession, which is why I say, have a five year plan, and keep the money in saving or contraction.

CURRY: It means also, that we actually recessions, to stop... Mrs TORABI: Right.

CURRY:.. .pretty frequently. Mrs TORABI: We have very cyclical. CURRY: OK, Farnoosh Torabi, thank you so much for a good Council this morning. Mrs TORABI: Gern happen.

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