What the financial crisis means for you and your money


It's easy to feel panicked with titans of the financial world like Lehman Brothers, Merrill Lynch and AIG either failing, selling out, or getting taken over by the government this week. The financial world is truly in crisis, but that doesn't necessarily mean your money is now at risk.

Take a deep breath and read on as we take you through 12 personal finance topics and explain what the mayhem on Wall Street means for you:

For your stocks: No doubt about it, the market is going to be swinging wildly for the next few months. Predicting the direction of stocks is all but impossible, but it seems likely the major indexes will be down from here at year-end. That doesn't mean you should sell. But if you will need some of that money in the next year or two, use upswings as an opportunity to gradually exit your riskiest positions.

For your mutual funds: Many mutual funds have been heavily weighted in financials (especially value funds, which buy stocks that seem cheap), so you may be feeling the pain now. But you can bet your fund managers are working feverishly to recover. If you sell now, you miss out on a chance at a rebound. Still, in times like these, index funds prove their mettle. At least you don't have to worry about doing worse than the market.