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MADELEINE BRAND, host:

This is Day to Day. I'm Madeleine Brand. What should you, the average investor do to ride out this crisis in the financial markets? We turn now to Michelle Singletary. She's our finance contributor for some advice and Michelle, people who may have taken a peek at their 401(k) accounts and had a minor heart attack after seeing what happened after yesterday's free fall in the stock markets, what should they do now? Should they just close that piece of paper back up and pretend they never saw it or should they do something?

MICHELLE SINGLETARY: Well, it depends on where you are in terms of your investment strategies. If you are in your 20s or 30s or you've got 20 years to retirement, you got to shut some of this news out. Listen to some, but stop looking at it on a daily basis because you will have a heart attack. You will panic. If you are diversified, meaning that you have allocated your investment contributions across the board, some stocks, some bonds, large companies, small companies, international stocks, you're going to be able to ride this out.

BRAND: Well, what about shifting the allocations? Should you do that?

SINGLETARY: I wouldn't do that right now because if you shift now, meaning that you're going to have to sell some to put it in some other asset allocation, you might be locking in some losses on some good companies. You know, lots of companies took a major hit and some of them didn't deserve to take a hit. So, if you shift what you have in there now, you could be locking in your losses.

Instead, what I advise you to do - if you're not well-diversified, go to your benefits office and re-allocate your new contributions, some new money going in. Make sure that money is being diversified. And like about four times a year, I do this with my own portfolio. I sit down with my financial adviser, we look in to see if I'm over exposing one area and then I shift new contributions. And so, that's what I would tell people now. Some new money going in - you might want to put that in some other areas, if you are not diversified.

BRAND: Let's talk about people who are facing retirement imminently or they're planning their retirement, what should they be doing?

SINGLETARY: I hate to say this and I don't want to panic them, you should be worried, if you're not diversified. But listen, if you are near retirement, the first step to take is determine how your assets are currently allocated. Because in retirement, you're looking at a lot of different income strings. Social security, if you by some chance in luck still have a pension, what you have in savings, what your expenses are - so you want - don't panic if you got other income strings.

But if every dime you have is in one stock or one sector, you ought to be worried. Because you're not diversified and you need to be talking to a professional about how to get out of this and re-allocate, so that you can have enough money to live through retirement. So those who are probably 20 years, 15 years away from retirement probably nothing to worry. If you are closer, you're going to have to get some help.

BRAND: Well, given the current market, you've put all your money in T-bills. You're not going to get anything.

SINGLETARY: Right, you know, one thing I would suggest and not putting all your money in there. There's something called a Treasury Inflation Protected Securities or TIPS for short. And these are securities that are tied to the consumer price index. It allows your principle to keep up with inflation and this is a good product, if you are risk reverse(unintelligible), and you're not sure what the heck to do and you're worried about your money keeping pace with inflation. You certainly can look at this as an option.

BRAND: Michelle Singletary, Day to Day's personal finance contributor and she writes, The Color of Money column for the Washington Post. If you have some questions for Michelle, you can write to her. Go to our website npr.org/daytoday, click on contact us and put Michelle in the subject line. Michelle, thank you.

SINGLETARY: You're so welcome.

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