Q&A: Market jitters

Question: We have about $80,000 invested in mutual funds. With what’s going on with the euro and the latest banking scandal in England, we are worried the economy is going to tank and we will lose everything. What I would like to ask is a) should we put everything into GICs and wait it out or b) buy gold and silver with it. If the latter, should we buy actual physical gold and silver, buy stocks in gold and silver companies, or buy it in coins. I know it’s not a lot of money, but it’s all we have for our later years. I appreciate any advice you can provide. – Mark C.

Gordon Pape answers: My first words of advice are to stop panicking. Before you do anything, take a close look at the mutual funds. What type are they? Are they all equity funds or do you have some balanced funds or bond funds in the mix, which will reduce your exposure to the stock market? You haven’t said what age you are but the closer you are to retirement, the lower your stock market exposure should be.

I certainly would not advise investing all your money in gold or silver. Both have been poor performers this year and the mining stocks have done even worse. Precious metals will do well when inflation heats up but we aren’t at risk of that happening any time soon.

GICs will give you peace of mind and if that is what this is all about, then fine. But with rates so low, you’ll do well just to keep pace with inflation, even though it is only 1.5% right now.

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