Managing Personal Finances Amidst Wall Street Turmoil

Barry Glassman
Certified Financial Planner and Certified Fund Specialist
Monday, September 22, 2008; 11:00 AM

Worried about what the financial turmoil on Wall Street means for you? Certified Financial Planner and Certified Fund Specialist Barry Glassman, senior vice president of Cassaday & Company, Inc. in McLean, Va., was online Monday, September 22 at 11 a.m. ET to take questions and offer guidelines for making wise financial planning decisions despite uncertainty on Wall Street.

Glassman has established an excellent reputation in the field of financial planning and wealth management by taking a comprehensive, long-term approach to the financial needs of his clients. Among his honors: he was named one of the 20 Rising Stars of Wealth Management in 2008 by Private Asset Management, one of the Top 50 Independent Advisors in America in 2008 by Registered Rep Magazine and one of the top 50 members of the Virginia Winner's Circle of Investment Advisors in June of 2008 by Virginia Business Magazine. He's been quoted extensively by local, national and international media. And he has written regular columns for The Legal Times.

The transcript follows.


Barry Glassman: My name is Barry Glassman and I am a Certified Financial Planner in McLean, VA. For then past 14 years, I have been providing financial advice to clients located throughout the United States. I look forward to answering your questions.


West Falls Church, Va.: Can you explain once and for all who and what the FDIC covers?

My information tells me that each account is protected up to 100k. Then financial people tell me that it's 100k per account holder.

Barry Glassman: There is so much information regarding these limits; especially when it comes to accounts with different ownership titles. The most reliable source is the FDIC site:


Washington, D.C.: Almost all the money in my Thrift Savings Plan is in the C Fund (Common Stock Index), despite my intentions to make changes over the last few years. Does it make sense to move it now, or is that akin to closing the barn door after the horse has bolted? Does the L (Lifecycle) still make sense in these times?

Barry Glassman: This question is on many peoples' minds when the market is so volatile. I like lifestyle funds because they put auto-pilot onto two very difficult disciplines. First, these funds reduce the risk as you get closer to retirement. Secondly, they rebalance automatically. It is very difficult for us (as humans) to sell off our beloved asset classes that have out-performed and purchase those that have disappointed us. These funds make these hard decisions for us.


Galveston, Tex.: Should I change all my different mutual funds into government guaranteed Money Market funds? Should I also withdraw $10,000? cash from my checking account just in case?

Barry Glassman: Whether you believe we are at a market top or bottom, you should always own the investments that meet your risk tolerance and are correctly positioned to meet your goals. If you need these dollars in the next year or so, then you should have them in a safe place.


Dallas/Ft. Worth, Tex.: Since graduating college in 2005 I've been doing my best to get educated about managing my finances. However, I am having a difficult time finding an EASY TO UNDERSTAND book on mutual fund/401K investing.

I hope you answer my question because it's so important to know for yourself what's going on with your investments instead of relying solely on outside advice. Thank you.

Barry Glassman: The book I have handed to more people over the years has been "Personal Finance for Dummies". If you want to rip the cover off while you read it on the METRO, you certainly can. Another great resource id the website,


Laurel, Md.: Being a believer in the (weak version of) the Random Walk Theory and in Modern Portfolio Theory, I've been sitting out this stuff as proudly ignorant of what's going to happen next.

I do have to wonder, though, if the finanical sector of the S and P has become correlated with another asset class, and hence a re-balancing for variance is called for?

Barry Glassman: Did you really ask me about a rebalancing for variance? What I believe you mean is that many asset classes long thought to reduce risk when combined with each other have not had such a great benefit recently. That is certainly true. US and foreign stocks have moved mostly in tandem recently.

_______________________ FDIC


Fort Washington, Md.: Hi, I'm in my early thirties, with 28,000 in student loans and some other debts that total 12,000. I have a three-month emergency fund established. I have just begun a new position, the company matches my 401k contributions up to six percent, I will be contributing up to the six percent matching. Should I attack my other debt, student loans, expand my emergency fund, or begin a Roth account? I know that I should do one or the other I am just unsure of the order that I should be doing them in.

Barry Glassman: Unlike most people, you have the necessary emergency fund set aside in case of financial trouble. You are taking the correct next step of contributing up to the match maximum in your company 401k. Next I would look to the interest rates you are paying on the "other debt". If these are high and non-deductible interest rates, pay those off next.


Worried in Washington: Good morning. My husband and I started planning to buy our first home last month. We received one mortgage proposal and were planning to get a couple others this week but after the recent financial turmoil I'm not sure we should continue. Should we put our dream of buying a home on hold or is now the time to push ahead?

Barry Glassman: You are certainly not alone in questioning the timing of a major purchase during this financial environment. Many potential home buyers focus on their purchase price and interest rate; I suggest looking closely to the stability of your income as the most important factor. While the home may decrease in value after your purchase and the interest rate you lock may not be the lowest, as long as you can afford the payments based on your income, you can wait for the market to come back. If your income or jobs are at risk, you may want to wait.



Bowie, Md.: I have an ARM that's indexing in the middle of next year (i.e. it's 5-year teaser rate expires) against the one-year Treasury constant maturity.

To hedge against the possibility of increased short-term rates between now and then, I've bought a future on the 2-year Treasury note (which should move approximately with the 1-year CMT). Is this an appropriate "hedge" to break even between the bond and my mortgage cost? (The national amount is about twice the value of my house.)

Barry Glassman: There can be a lot of problems with this type of hedge. The biggest one that comes to mind is that even if this works, it is only temporary until the Treasury note future expires. What happens after that? I suggest you call your mortgage professional and consider and compare longer fixed rates.


Valdosta, Ga.: My husband and I have 4 bank accounts and 2 CD's in BOA. Amounts to nearly $200,000. Can you explain the 'insured to $100,000' rule? If some of our accounts are in one name and others in both (but some with his name first, others with mine) -- what part of our money is 'insured' (leaving aside how safe any $$ is right now)? Should we transfer some to other banks? Thanks.

Barry Glassman: There is so much information regarding these limits; especially when it comes to accounts with different ownership titles. The most reliable source is the FDIC site:

_______________________ FDIC: Your Insurance Basics


Washington, D.C.: I recently graduated and am new to the workforce. I want to start early with my investments, but with the markets the way they are is it best to hold off? If not what is the best way to enter the markets now?

Barry Glassman: Whether we have had a stable stock market or one that we experienced last week, stock markets always have risk. Unfortunately, so many your people wait to invest until they either make more money or feel confident about the market. If your investment dollars are for long-term retirement goals, then start a monthly savings program today. Then you can decide how much to put at risk in various markets.


Tenleytown, Washington, D.C.: My wife and I are in are late 50s and looking to retire early. We typically rebalance our assets in mid-October. That typically meant taking some profits out of mutual funds and putting them in federally guaranteed assets.

Rebalancing this year, however, looks like it will mean taking money out of Federally guaranteed assets and putting them back in mutual fund/stock market investments. Do you think this is a good idea considering the possible doomsday scenerio that Paulson and congressman have alluded to over the weekend? Or, should I just keep the federally guaranteed money where it is? Thanks

Barry Glassman: You are really asking two questions. First, "should I continue my rebalancing discipline and put more into stocks." In the past, you followed your original plan and sold stocks while they were doing better than the other assets. Following your rebalance discipline means making the challenging decision of buying stocks when they are down.

The next question is, "If we need the money in the near-term, should we continue this plan to rebalance?" This is more of a judgment of your need for income. If your 'early' retirement is in the next year or two, and you will require these funds to live on, then you must revisit your rebalancing plan altogether.


Barry Glassman: N.C.: Re: Should I also withdraw $10,000? cash from my checking account just in case?

My clients ask me this all the time. Should we have some emergency cash on hand? Yes. While the more fearful families will have some cash set aside for scary financial or terror issues, even during the Northeast's blackout in 2003, cash was king.


Punta Gorda, Fla.: Hi Barry,

What effect do you think the Federal bailout of the banking community will have on the housing industry?

Barry Glassman: There will be voluminous books published on the Federal bailout. So in this short chat, I'll do my best.

Lower interest rates on mortgages will certainly help to move along the housing comeback. The steps taken with Fannie and Freddie saw mortgage rates drop significantly.

In order of importance, I believe housing faces a number of hurdles. These are the first to come to mind:

1.Confidence. Just as investors thought that home prices would continue to go up, there is a challenge to the confidence of those looking to buy in today's market.

2.Confidence again. Much of the home market is based on the confidence that for my family to buy another house (out of choice, not job move etc), we need to have the confidence that we can sell our home. Once this confidence is shaken, the housing shell game comes to a great slowdown. Far fewer families will risk moving up (condo to townhome; townhome to single family, etc...) and wait to move.

3.Lending standards. New home buyers are now facing the double-whammy of needing good credit as well as upwards of a 20% down payment. The sheer number of families excluded because of these hurdles will be a challenge to a new run-up in real estate prices.


Anonymous: I have a SEP IRA that I need to contribute to before October 15th. It's mostly in a lifestyle fund, which, like everything else, has hardly had a stellar performance this year. Is it still a good idea to put my contribution towards a fund like this, or into bonds or something instead in the current climate? The shares are cheap right now at least!

If you have a lifestyle fund as your main IRA, is that by definition, diversified?

I have the lifestyle fund and a Roth which is a real estate fund (yeah, not so great, but not going to take out that money since I think that will come back up. Eventually).

Barry Glassman: I have the lifestyle fund and a Roth which is a real estate fund (yeah, not so great, but not going to take out that money since I think that will come back up. Eventually).

Most lifestyle funds are made up of other funds, which are usually diversified as well. In examining these two layers -- at the fund and individual holding levels -- you will often find hundreds or even over a thousand holdings.


Alexandria, Va.: Good morning. I am 29, and by this point, I have switched jobs 2 times. As a result, I have an inactive 403b, I plan on starting another 403b with my current company (who I plan to stay with for at least 3 years or so), I have a mutual fund account and a Roth. I'd like to consolidate somehow. Does it make sense to take the tax hit on the inactive 403b and roll it into my Roth? Thanks.

Barry Glassman: I believe you are asking two questions. First, "Should I consolidate my accounts?" You can easily roll your old retirement accounts to either an IRA or your current employer's plan.

Next, you are asking whether a Roth conversion makes sense. This strategy may make sense, but I would examine the impact on your current year taxes should you choose to make the move. I also like Ed Slott's site:


Rockville, Md.: When is the Dow hitting 36,000?

Barry Glassman: That's James Glassman, the former Washington Post columnist who wrote that book 8 or 9 years ago. No relation...


Fairfax, Va.: My husband and I were going to put $10,000 in a 529 plan for our daughter's higher education this year. She is in first grade. Should we put the money aside and wait until the markets calm down a bit?

Barry Glassman: Your question is one of market timing, of which I am no fan. However, if you are nervous about putting the money directly into stocks at this times, then dollar-cost-average by dividing the deposits into monthly payments.

_______________________ Ed Slott and Company


Capitol Hill:: My wife recently sold her condo in Canada and made a about 70K profit. We want to put that money into a CD, but should we keep that money in CAN dollars and hope the exchange rate changes more favorably, or move it to U.S. dollars in a U.S.-based CD now? We hope to use this as a down payment for a house here in D.C. within the next couple of years.

Barry Glassman: You once had real estate risk and currency risk. Now, you have just currency risk and you are trying to time the movement of money based on the strength/weakness of the Canadian vs US dollars in the next year or two. That's a lot of pressure to put on yourself. I would examine the hypothetical benefit in the case that you are right, with the potential delay or cancellation of your home purchase if you bet wrong.


Florida: I have been keeping all my savings (minus 403b, Roth IRA contributions) in a money market bank account. The account pays a taxable 3.30 percent interest. Am I being to conservative? Is there a better place to keep my savings?

Barry Glassman: Beyond the obvious avoidance of market volatility, you must examine why else to have such a weighting in money market accounts. If these funds are for long-term retirement savings and you have decades to invest, you may find yourself exchanging market risk with inflation risk.


Washington, D.C.: I'm looking for a financial planner so what should be expected (e.g. cost structure, qualifications, experience, etc.) when evaluating candidates? Do you have a webpage where I can find more information?

Barry Glassman: This must be my wife's question...

Good resources can be found at the Financial Planning Association's website: They have sample questions to ask.

My information can be found

_______________________ Financial Planning Assocation

_______________________ Cassaday and Company, Inc.

_______________________ This concludes today's discussion with Barry Glassman. Thank you for joining in.


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