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A Few Questions With Financial Planner Roger Kasch

The American Express consultant suggests you check out bonds as well as stocks.

We could all use some advice in tough times like these. So let's get some.

Midway through Monday's trading session we asked American Express financial planner Roger Kasch what he's been telling his clients and what steps we should all take before we invest any money in the first place. Roger is a certified financial planner and chartered financial consultant based in Richmond, Va. As you might expect, he encourages us not to cash out. Instead, he says, keep plunking money into the market each month through your 401(k) or similar investment plans.

That said, he urges us to make sure we've got a rainy-day pile of cash on the sidelines before we sink a dime into stocks.

Have you gotten a lot calls from clients over the past week?



last Tuesday, I've received about eight calls. That's out of about 325 clients. I'd say that's in line with my expectations. Since most of my clients are following longer-term financial plans, they tend to not focus as much or short-term events. But this is clearly an extraordinary event, so some did call.

What did they want to know and what did you tell them?


Last week the primary question was, "Can we do anything?" and the answer was no because the markets were closed. Now the main question is, "Should I be moving to cash and waiting this out?" I'm telling clients to keep a long-term perspective and not rush into anything. This hopefully won't have a long-term impact on the

stock market. You don't need to take action today if you're investing for your retirement or to send your children to college and those goals are years away. Also, if you're not completely weighted in stocks, bonds are helping you cushion these losses.

One thing people shouldn't forget is that if you're investing systematically

a set amount each month, as you do through a 401(k) plan, this is a great time to be doing that. You can lessen your risk by buying in good and bad times. It may turn out that this was a great time to be buying. It doesn't feel good at the time, but it can make sense in the long run.

What would you say to growth- and tech-heavy investors who lost a lot of money before the attacks and are bearing the brunt of today's volatility?

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First of all, they need to look at what's happened over the past year as the value style overtook the growth style. You might make the case that a big growth weighting makes more sense than it did a year ago. No matter what, they need to sit down and figure out what their asset allocation should be. They need to think about how much they should have in bond funds and value funds, beyond growth funds.

I often tell clients to imagine the money they have now is cash -- then ask themselves where they would invest it today. Putting all of it in growth stocks probably isn't the answer they'd pick.

Some investors are probably wondering if their account information is safe. What would you say to them?


I got a couple of questions about that because our corporate offices are in the World Financial Center, which is near the World Trade Center. Thankfully, we keep our account records in Minneapolis and Phoenix. So, we haven't had any problem with losing account data. New York is an expensive place to keep back-office files, so that information isn't lost.

If you were building a financial plan today, what returns would you expect from stocks and bonds over the next five years or so?


Without claiming I can predict the future, I use an average annual return of 7% or 8% when I build financial plans. Historically the stock market has averaged a 10% annual return and the bond market has averaged between 5% and 6%, so I aim for somewhere in between those two. I don't know if average returns will be different going forward, but I'll stick with the historical averages. In the short-term, however, we always see wider swings one way or the other.

What are some financial steps we should all consider before we invest our money in stocks?


First and foremost, make sure you have a cash reserve that will cover at least three months' expenses. Second, make sure that if you have any debt that isn't tax-deductible or exceeds the rate of return you can expect

from your investments, pay it off. The two other main issues you should think about are disability insurance and life insurance. If anyone is dependent on you, you should think about these.

Ian McDonald writes daily for In keeping with TSC's editorial policy, he doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send your feedback to, but he cannot give specific financial advice.