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Invest wisely to avoid Y2K money worries (Part two of a two-part series) By Erik J. Martin On the Chinese calendar, the Year 2000 is the year of the dragon. Investors are worried, however, that Y2K is really shaping up as the year of the bear. So how does one position his or her money to weather Y2K financial pitfalls and capitalize on the investment opportunities of the millennium? What should retirement savers and market-minded shareholders do to protect their assets from the infectious Year 2000 bug? For starters, don't panic, say the experts. Pull out your portfolio and put on your Y2K thinking cap. It's time to reassess your long-term and short-term investment strategies. Many financial advisors like Stephen Stanton, registered investment advisor for Transamerica Financial Resources, based in Los Angeles, believe that your money's best defense against Y2K is diversification, a la the "model portfolio theory" that recommends spreading your money between five mutual fund investment classes: growth, income, growth and income, aggressive growth, and safety of principal. The percentages of money in each category will depend on your goals and age. Long-term investors should consider loading a bigger percentage into aggressive, higher risk investments, while older individuals nearing retirement should ponder investing more conservatively in cash, bonds and income. Nevertheless, Stanton suggests going on a financial fast this year. "Don't slow down on your tax-deductible contributions to thinks like your 401(k) or IRA, but consider avoiding earned income investments and putting a lot of money into the stock market this year." Instead, he says, try paying off credit card and loan debts and think about investing more in liquid accounts like certificates of deposit. Precious metals like gold, real estate and bonds may also be sound investment alternatives this year and next. You may also want to consider investing in companies making a profit on the Year 2000 problem. The Year2000.com Web site provides a listing of Y2K stocks at www.year2000.com/y2kstock.html . After continuing to hear negative reports about the inability of overseas nations to tackle their Y2K problems, many investors are uneasy about international funds and foreign investments. Some financial prognosticators feel that Y2K-related uncertainty over the world economy couldn't come at a more dangerous time, now that global markets are becoming more vulnerable and bad fiscal news in Asia and Russia is shaking confidence. Yet investment advisors like Stanton believe that now is the perfect time to invest in Asia and Pacific Rim companies because you can buy so low. Suellyn Hawking, financial planner for Chicago Heights, Illinois-based Savant Investment Advisors, disagrees. She suggests possibly avoiding international funds, sector funds and emerging markets, especially telecommunications stocks. During a Y2K economy, she says, "I would put a lot of faith in blue chip stocks, domestic funds and stocks and a value-oriented approach. Value category mutual funds and stocks currently undervalued that have the potential for increased earnings may be safe bets." And what about technology stocks? Has the Y2K problem made "technology" a voodoo word? "No. They play an important role in your asset allocation and they're almost sure to rebound from any Year 2000 glitches," says Stanton. "I wouldn't buy into just one company's stock if I was a new investor, but over the long term, investing a portion into technologies can be a wise choice." Other experts say that stocks that could be hit hard by Y2K factors include shipping companies, air-transport companies and Internet businesses. While these stocks could become great values if they dip low enough, many financial advisors recommend investing in businesses that prosper in good and bad times, such as health care corporations, reputable consumer-products companies and big name media companies. "Who knows how pervasive the Year 2000 problem will be," says Hawking. "No financial advisor can predict what's really going to happen. Investors have to safeguard themselves by looking closely at their portfolios and reevaluating their percentages. You can never trust in the market, because so many things can happen. If investors get panicky over Y2K and start selling, yes, the market will be impacted." Hawking says she continues to remind her clients that "the key to successful investing is to think long-term. Hang on and wait it out. Remember that the more risk you take on, the bigger the potential payoff." For better investment peace of mind than this well-meaning column can possibly offer, consider seeking the professional services of a financial-planning consultant, who can help customize strategies for your particular financial goals. � 1999 Thomson Target Media Erik J. Martin is a freelance journalist who has penned a regular multimedia column for Screen Magazine and has written for a variety of other publications, including the Chicago Tribune, Coverstory and The X-Files Official Magazine. He lives in Oak Lawn, Illinois, with his wife, son, and the Millennium Bug, which he is still trying to exterminate from his PC. Certainly no self-proclaimed technowhiz, Erik prides himself on being "an average guy with the same concerns and questions about Y2K as everyone else. My job? To get answers to those questions, and pass them along to you." Techno file index Mail Tribune Copyright � The Mail Tribune 1999, Medford, Oregon USA