Keeping Your Money Safe

With the recent government bailout of AIG, many consumers are wondering if their money is safe. Stephanie AuWerter, Editor of SmartMoney.com, has some tips for securing your financial future.

In tough financial times, people ask all kinds of questions, usually revolving around whether or not their bank - and their cash - is safe. "The basic answer is that yes, the money at your bank is probably safe," says AuWerter. Most banks are insured by the FDIC, meaning they will cover a loss of up to $100,000.00 per person if the bank goes under. If you're worried about your financial protection, give your bank a call. They'll be able to assess your personal situation.

Others are worried about their investments in stock market. While current share holders are losing money, potential investors are wondering if it's time to buy. "This is probably a pretty scary time for first-time investors, but I do think if your time horizon is five years out, ten years out you don't want to give up on the stock market," says AuWerter. She suggests dollar cost averaging, or investing a set amount of money every so often much like you'd do with a 401k. Dollar cost averaging has the advantage of allowing you to buy less stock when prices are high and more stock when prices are low. "You don't want short term money in the stock market, but long term money does belong there," says AuWerter.

Consumers are also concerned about the housing market. While loans have been hard to come by in the past few months, AuWerter believes the government's bailout of AIG will help in the long run. "Part of this bailout is to get the credit markets working again," says AuWerter. "Once this bailout takes effect, hopefully it will be easier to get a loan, which in turn means we'll see more buyers." Theoretically, the bailout should help the housing market over time.

Regardless of any financial bump in the road, you should always have a good, solid emergency fund to fall back on. Keep at least six months living expenses in a safe place like a savings account. "This way, you don't need to pull money out of the stock market during times like this," says AuWerter. Not only will you have the cash to get you through an emergency, you'll sleep better knowing you can withstand any stock market tumbles.

For more information on the nation's economic status, as well as additional personal financial advice, click here to visit www.SmartMoney.com.

By Erin Petrun