Reassessing investment plan in a recession
Some company owners tap retirement funds to access cash Making the right moves
BY MARTIN C. DAKS Wealth Management “It may be OK to sit on your hands for a
in investment planning
STEVE ESTRELLADO is a Paramus business little while, but that’s not a good strategy for All investments involve some degree of
owner who said he saw the writing on the wall Accountant Kenneth J. DeGraw said he’s the long term,” DeGraw said. “If you sit still, risk. Knowing what to consider before-
and shifted his retirement funds to short-term seeing many of his clients moving their per- inflation will just drag you underwater.” hand — and whom to consult before
securities in case his business needs cash. And sonal retirement funds into liquid, or near- It can be tough to point to trends, since each taking the plunge — is critical. Here are
he’s not alone, according to financial experts. cash, investments. case depends on how comfortable each individ- some points to consider, as well as some
“Small businesses aren’t getting bailout “Entrepreneurs will always invest in their ual is with risk, DeGraw said, “but I do see more dos and don’ts, in planning your busi-
money, and banks aren’t extending short-term own business, because they’re familiar with it clients looking for a kind of security blanket.” ness investment strategy:
loans,” said the 31-year-old entrepreneur who, and believe they know the risks,” said DeGraw, a “Business owners need to consider the ■ Match the risks you take to your toler-
with his 27-year-old brother, Christian, runs a Somerville-based partner in the CPA firm With- business and personal investing needs,” said ance for risk.
marketing company called Estro Entertain- um,Smith & Brown P .C.“But a significant num- Darin Pope, chief investment officer of United ■ Don’t jump into an investment. Do your
ment LLC. “I have to stay liquid because I have ber of our business-owner clients are also con- Advisors, a Secaucus-based wealth manage- own research, or talk with a trusted finan-
to meet payroll, insurance and other expenses. verting at least part of their retirement portfolio ment firm. “They need to reassess their per- cial adviser.
I’ve already tapped into my retirement money to cash or to short-term certificates of deposit.” sonal and business liquidity needs, since what ■ Try to coordinate your business and
to help fund the business, and I want to main- But he said fear can drive some people to was necessary in the past may not be neces- retirement needs and goals.
tain that flexibility if I need it again.” freeze when it comes to retirement planning. sary in today’s economy.” ■ It’s easy to get hooked on doing
Estrellado said fears of inflation also are things a certain way, but remember that
driving his strategy to stay with short-term your strategy needs to change with the
Steven J. Dundas
government securities, as “the U.S. govern- overall economic environment.
ment is basically printing money with nothing Do:
to back it up.” ■ Consider your risk-comfort level.
Despite the roiling economy, business ■ Research the underlying company
owners and other individuals that already are before buying an annuity. The guarantee
well-diversified may not be so quick to change may only be as good as the company
their investment strategy, said Rick Flynn, a that’s making it.
principal with Rothstein Kass, a Roseland- ■ Think about any early-withdrawal
based CPA firm. He works with high-net-worth charges you might be forced to pay
clients in New Jersey and New York on issues down the road.
like wealth enhancement, wealth transfer and Don’t:
asset protection planning. ■ Rush into making any long-term