With the economic storm raging external, to what degree do you keep your financial house safe and sound? BusinessWeek has rounded up 20 savvy ideas from financial pros

By Ben Steverman

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During the worst economic crisis in a lifetime, the right financial decisions are severe.

BusinessWeek asked financial planners for some advice on what to do—or not to do—with your money in the New Year. As we bid leave-taking to a horrible 2008, these "resolutions" may help abide your finances on the just track in 2009:

1. Don’t try to predict the future.

"We are currently in the midst of unprecedented and complex challenges," says Femi Shote of Asset Harvest Group in McLean, Va. Anyone who thinks he or she can betoken what’s going to happen is "delusional," Shote says.

Financial advisers ofttimes hear from clients who would like to sell stocks a little while ago and then purchase afresh when the market hits bottom. "My response is, ‘How do you know then that will be?’" says Trent Porter of Priority Financial Planning in Fort Collins, Colo.

2. Do keep enough pay in money available.

Even if you’re not worried about losing your job, a rainy-day fund can get ready calmness of mind.

There are different guidelines for how plenteous cash to keep on talent. Some say $12,000 or more by means of adult; others say it should be six to nine months of living expenses. With extreme cash available, you can avoid selling investments to pay according to expenses in one emergency.

3. Do invest internationally.

Though the financial crisis started in the U.S., the ended year has been worse for investments in the tranquillity of the world. The MSCI EAFE, an index of international stocks, is down 43% this year, and stocks in emerging economies fared distant worse. American investors who diversified abroad have also been pummeled by the arise in the U.S. dollar.

Even hinder a year like that, advisers say it’sitting not wise to vacate international investments entirely. For common thing, though some key overseas economies, like China’s, have been hit hard lately, their long-term household fundamentals look good in a higher degree than those of the U.S.

4. Don’t try to pick one winning investment. Diversify.

Putting all your coin in common stock is dangerous at a time whenever a company’s bankruptcy can completely wipe out the value of its shares.

Robert Siegmann of Financial Management Group in Cincinnati advises clients to overplus their portfolios betwixt fixed profits and stocks, with shares in various types of companies — small and large, U.S. and international. "Don’t try to pick the winning stock, or the winning idea. Just diversify across all investments and markets," he says.

5. Do think about energy efficiency.

Russell Francis of Portland Financial Advisors in Beaverton, Ore., recommends that investors take advantage of a $500 federal residential life tax credit that was rescinded in 2008 but returns in 2009. The power be able to help defend the costs of adding insulation or replacing doors, windows, or furnaces—home repairs that should also save you on heating and cooling costs.

6. Don’t stop contributing to 401(k) and other withdrawal accounts.

Says Sidney Blum of GreenLight Fee Only Advisors in Evanston, Ill.: "Everyone loves to endue in their 401(k) at the time that the markets are flying high-toned, but they should keep putting wealth in while the markets are down." He adds: "More money is made at the valley of a market than at the top."

Even more pessimistic planners say you should be taking advantage of any match your employer offers for retirement fund contributions.

7. Do living below your means. Save.

Investing for the yet to be is only possible if you have some money left over at the end of each month to sock away. View this BusinessWeek slide show for 25 ways to save more each month.

8. Don’t serve sudden moves.

"Refrain from composition most distant changes to the portfolio just because the financial markets are volatile," says William Howell, a pecuniary adviser in Noblesville, Ind. "Stick to the overall investment game plan."

In of the like kind an extreme environment, investment decisions based on emotion or fear are likely to lose you money. It’s probably better to ignore the day-to-day news and follow a long-term investing plan.

9. Do discharge off expensive debts.

Rather than investing your standard of value, you first power consider paying off debts, especially those with high rates or those for what one. interest is not tax-deductible. The avoidance of interest will likely save you more than your investments would have earned.

Stanley F. Ehrlich, an adviser in Westfield, N.J., notes: "Paying off a car loan with 7% interest provides each immediate 7% return, a return that is not [generally] available through most asset classes." Credit-card trespass is so expensive that most planners say it is continually the first something people should pay over.

10. Don’t give up without interruption stocks.

"Historically some of the best periods for stock mart returns have been during terrible economic times," says Paul Winter of Five Seasons Financial Planning in Salt Lake City. Though investors approaching retirement shouldn’t risk too a great deal of money in hare-brained equity markets, investors hoping to build a nest egg for the long term have few preferable options than the treasure up market.

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