Q: Please help us before we have no money left. My husband and I are in our mid-60s and have lost more than half the money in our 401(k) and Roth IRA accounts. Our financial adviser suggested that we not panic and that we stay the course. We took his advice, only to watch our funds continue to shrink. Now my husband is talking about funding our Roth and SEP IRA (for those who are self-employed) accounts before tax preparation this year, but with the poor economy, the thought of putting more money into these accounts really scares me. How do we protect what we have?

A: It is not panicking to want to protect what you have; it's sound, rational thinking. Since you are in your mid-60s, I'm guessing you may be retiring sooner rather than later and will need to start tapping some of your savings. But I'm concerned that your accounts are down by more than half. That shouldn't be the case if you had the right mix of stocks and bonds in your investments. As a general rule, people in their 60s who are nearing retirement should have at least 60 percent of their money in individual bonds or stable-value investments. (I prefer individual bonds, such as U.S. Treasury, over bond mutual funds because they have a set maturity date, so you know when you'll get your principal back as well as any accrued interest.) If your portfolio had a big stake in these less volatile investments, your overall losses this year should have been in the vicinity of 15, not 50, percent.

I want you to sit down with your husband and your financial adviser and review your current mix of stocks and bonds. If your adviser has put all your money into stocks, he or she had better have a very good reason for doing so. And if that's indeed the case, I recommend that you rebalance your portfolio: Move money out of your stock investments and into bonds. It won't make up for what damage has already been done, but it will protect you against even more losses if the market continues to drop.

Please note: This is general information and is not intended to be legal advice. You should consult with your own financial advisor before making any major financial decisions, including investments or changes to your portfolio, and a qualified legal professional before executing any legal documents or taking any legal action. Harpo Productions, Inc., OWN: Oprah Winfrey Network, Discovery Communications LLC and their affiliated companies and entities are not responsible for any losses, damages or claims that may result from your financial or legal decisions.


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