How to manage risk

Radio Transcript, 2 minutes 20 seconds, for use during week of May 26.

Description: Penny, Ira, and Susan review their investment discussions over the last year

Announcer: Invest Wisely comes to you from Iowa State University Extension through a grant from the Investor Protection trust, providing investor education on the web at: investorprotection.org.

Ira: We’ve been talking about all the things Susan and I have learned in our conversations with you over the last year, Penny. One of the most helpful conversations for me was talking about the differences between stocks, bonds and cash investment options.

Penny: It really helps to know the differences among these options and how they can help you reach your investment goals.

Susan: I appreciated learning about the advantages of mutual funds, how they pool money from a lot of investors so that I can have more diversification and draw on the expertise of professional managers even if I don’t have a lot of resources or time to research individual stocks.

Ira: In addition, I understand more about researching my investments and how important that is.  Stocks have the potential for rewards, but come with more risk.  Bonds can provide me with known payments at specified times.  And, as Susan mentioned, mutual funds let me pool my money with other investors.

Penny: What about saving for retirement, Susan?  Do you think you’ve made progress there?

Susan: I’ve investigated my employer’s retirement options and have started taking advantage of what they offer.  It’s really helpful that they provide an employer match.  I’ve also started an individual retirement account and I’m excited about the long-term benefits from that.  I just wish I had started sooner.

Penny: Susan, it really is better late than never.  

Susan: I’ve also looked into the 529 college savings plan, which looks like a good way to save for my granddaughter’s education. The withdrawals will be exempt from federal taxes if they’re used for qualified higher education expenses.

Penny: If you had to pick the most important thing you’ve learned from our conversations, what would you say?

Ira: Never make an investment decision in a hurry.  There’s always time to research and the Iowa Insurance Division can help by providing information on investment fraud.

Susan: Have clear investment goals.  And with those goals in mind, invest as much as you can and keep adding to your investments consistently over time.

Penny:  And remember, for more information, visit the ISU Extension website at extension.iastate.edu and look for 'Invest Wisely.'