Investing in a volatile market?

Where are we in the market? The stock market looks extremely attractive right now. The Dow hit 10,300 earlier this week. It was last there three years ago so you can get 2005 pricing on many companies that have grown significantly since then. More importantly, when you compare the projected earnings of the market to its current price (the most common measure of market valuation), this is the best value we've seen in over a decade. Other measures show a similar story. That tells us that although the economy may get worse, stocks are on sale right now.

What about houses and cars? There are cheap now too. These days a significant down payment will be a tremendous help in shopping for homes and cars. You can find good deals and both of these big ticket items, given that the median sale price of a home dropped 10% over the last year according to the National Association of Realtors, and dealerships continue to offer employee pricing to the public. But with these deals on homes and cars come mortgages and loans with higher interest rates.

What about tapping into 401k plans? Is that smart, given the current financial strains? You should not withdraw this money. Early withdraws are loaded with taxes and fees, meaning that you are actually losing money as well as taking away from the standard of living in your retirement years. This money should really be considered untouchable. Only in a crisis, such as medical emergencies or extreme financial woes, should you dip into your 401k plan. Even loans on your plan can be harmful in the long run, particularly in times like this when the market is cheap. The percentage of 401k participants that have taken out a loan from the investments increased to 18% in 2007 up from 9% in 2005. This

People are looking for cash right now, any advice for those who are looking to their credit cards? One of our big concerns is that consumers expect credit cards to be available as a cash source. We are seeing credit card companies taking opportunities to reduce lines. You will notice credit cards interest rates growing and lines of credit shrinking. Some credit card companies are increasing their rates by nearly double. Even responsible consumers with good credit, making payments on time are seeing the rise in rates and fees. The penalties for late payments have shot up significantly too. Recently, Discover raised their interest rate for new customers to 31% if they are late with their payments. Given all the changes and increases lately, be sure to read the fine print of your credit card offers. The House of Representatives just passed a new bill called the Credit Cardholders' Bill of Rights which will require credit card companies to notify customers 45 days in advance of a rate increase.