You probably know where the term “con” comes from – as in, to “con” someone, or a “con game”.  It is short for “confidence”.  By gaining your confidence, someone rips you off.

That’s what we’re seeing right now. People are afraid. They do not feel confident – confident that they will keep their jobs, confident that they will keep their homes, confident that their retirement investments will be there when they are old.

Television, web sites, financial advisers, the analysts on Wall Street, the Wall Street bankers – all are playing a huge confidence game, and we, the investing public, are their victims.  These vultures have really benefited, ever since the 401(K) really took off, and it was clear that regular Americans, now deprived of pensions and other ways to retire comfortably, would just shovel money in without really  knowing anything at all about wise investing, on the promise that “over time, the market returns 8%-10%-14%” you name a figure.  The whole thing has been a con.

But really, what I wanted to talk about is confidence, and how to regain it.  Think:  What would it be like to feel confident that your money was safe, right now?  Think of the stress that would be off your shoulders.  Think of how you would breathe easier, knowing that whatever the market was doing, up or down, you are in a secure position, not losing, not having to learn more than you have time to learn, or more than you can understand.  Not know what the heck to do as you watch the market numbers go down.

What would it take to feel confident that your money was safe?  A friend of mine was completely freaked out, and kept asking me, What should I do with my retirement accounts? (This was last November, she was down 15%.)  I told her I thought the markets would keep going down, for some time, but that was just my opinion, and she needed to do what she felt was safe.

Her adviser (who was completely ripping her off in fees by the way, but she didn’t know that) kept saying “Oh no, you are in for the long term, don’t worry about blips in the market.”

Yet when I looked at my friend, all I saw was worry!  She kept saying she hated the markets, hated having to think about being in stocks.  She did not like the stock market, did not like that she couldn’t understand it.  Her confidence was shattered, and so was her emotional well-being.

I asked her:  Given how you feel right now, are you willing to bet what money you have left that not only will the markets stop going down, but that they will go up enough in one year to recoup what you’ve already lost?  Her answer was no.

I said to her:  If you are this uncomfortable in the stock market, take your money out!  Get this monkey off your back!  You can earn small but secure returns in money markets, CDs, and even learn later about government bonds or other less risky investments.  Will you earn 8%, 10%, 12%?  No, but that is never a sure thing anyway.

She moved all of her accounts to money market funds.  Her relief was palpable. She could breathe again!  She did not have to spend day in and day out worrying and watching tee vee, watching her hard word slip away from her.  Today, she feels a whole lot better for sure that she’s missed the downturn in the last 4-5 months as well.

If you feel insecure being invested in stocks, if you do not have confidence that  your money is in a secure place – then move it. Now. Today.  If your advisor tried to talk you out of that, remember that they have a vested interest in getting fees from you.  Move your money out of their claws.  Your gut is at least as accurate as any investor – including me!  No one has any answers in a market – possibly a depression – like this.

In case you care, and I’m not saying you should do any of this, here’s what I would do, and actually is what I am doing right now:

Move your money to a high-interest savings account.  ING Direct is a good one, and if you also open chekcing, you can access your money wit a debit card.  High Interest these days is just under 2%, but would you rather make 2% or lose 25%?

One your money is safe, then learn about what is out there that is cash or cash-like, and then move some money into those accounts. For example, there are government bond mutual funds like GNMA, or inflation-adjusted bond funds or ETFs where you can invest, and earn a few more points, and your money is relatively safe.  Note:  Funds and ETFs are not insured accounts. For FDIC insurance, you shoudl be in a money market, or CD, and verify it is insured with the institution.

You can then take some money out of savings, and open accounts with a low-cost broker like TradeKing.  Buy into some of those cash-type vehicles through these low fee brokers.

Once you are securely set there, you can explore other ideas, like buying some gold or silver, or some commodities, or buying stocks in foreign countries like China, which are available as ETFs or within a fund.  (I prefer ETFs but more on that another time.)

I also only put the company match into my 401(K).  I put extra money into a ROTH and Individual IRA outside my company, into a self-directed brokerage account, where I can decide for myself where to invest my money – I’m not stuck with the investments and rules my employer decides is right for me. They’ve already proven they have no idea how to protect my retirement interests.

The bottom line is, you need to restore your own confidence.  The so-called advisors are not going to help you.  Television is not going to help you.  If you are scared, fearful, anxious, take steps NOW to remove that stress from your life.

Your money can in fact be safe, and there are in fact places to invest where you can make money right now.  Just not in the ways that the con men will tell you about.

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