Indian stocks: What to enter and what to exit

The markets opened with modest gap up today on account of some buying seen in the Sensex heavyweights like SBI, Reliance, ONGC and Infosys. Market breadth was seen positive.Sensex was up 80 points at 14009 and Nifty was up 20 points at 4140. Experts who spoke to CNBC-TV18, had Banking, Steel and Sugar sectors foremost on their minds. Here's how they view the sectors:

Sugar Sector

Sugar sector has been news for quite some time owing to the political upheaval in Uttar Pradesh. On sugar, Anand Tandon of Gryffon Investment Advisors says that there are no fundamental reasons to buy sugar yet. “There could be political reasons and some expected sops but that aside, the companies cannot make money on selling sugar at least in the near-term”

Sudarshan Sukhani of Technical Trends is long on Bajaj Hindustan and Balrampur Chini. He believes that the ideal time to buy is when the sector is in the dumps and when all fundamental analysts will say that sugar will never go up. However he adds that “This is not a trading call, this is something that I am looking at for the next one or two years”

Steel Sector

On this sector Anand Tandon feels that the outlook is somewhat mixed with the international prices being reasonably firm and the general outlook of the companies also continuing to remain firm. “From that point of view maybe there is a reason to hold on to some of these stocks but you have to remember that all said and done, it is a cyclical industry,” warns Tandon.

However, Atul Suri of Marathon Trends puts his bet on this sector. "I think steel has been one of the really quiet performers, no one talks about it but lot of wealth has been created" he states.

Banking Sector

Banking is another sector which have been doing well for the past few trading sessions. Q4 numbers from the banking industry were in line with street expectations. Net interest income and net profit for the banking sector as a whole increased by 25% and 15.3% respectively in Q4 FY07. A lot of people have been arguing that more value is found in PSU banks right now and for the first time people have started believing that it is better place to be in than private sector banks.

Anand Tandon seconds this thought saying that the PSU banks have had the biggest knock and therefore suffered the most with the fears of interest rates going up. “From that point of view therefore offer significant value” The private sector banks on the other hand will be in play over the next few quarters as it becomes clearer that some of the international players maybe allowed to invest in India.

Sudarshan Sukhani feel that the charts of the private sector banks suggest that the final up moves are still to come. Though he adds that "I am a big fan of PSU banks so to me all the charts looks good,”

Media sector

Lately there has been a lot of activity in the media and entertainment sector. With Brokerage firms like UBS are betting on the Indian media sector, they feel that the Indian media stocks will continue to trade at premium valuations, given their high growth potential over the long term and strong growth in the near to medium term.
Anand Tandon feels that valuations are not cheap but looking at growth, the valuations have to be factored in and the numbers, which are fairly large, will take some years from now. That is what the media companies are reflecting at this stage.

Asian shares close mostly lower on Chinese fall yesterday; Shanghai rebounds

Feb. 28, 2007

Shares across the Asia-Pacific region closed mostly lower after the steep drop on Chinese markets yesterday followed by the fall on Wall St overnight -- although the Shanghai markets bounced back today on bargain hunting, dealers said.

Tokyo shares ended sharply lower. Dealers said some investors showed an appetite for buying, so reducing the losses, while others stayed on the sidelines, waiting to see how the markets in Europe and the US perform tonight.

The blue chip Nikkei 225 Stock Average finished 515.80 points or 2.85 pct lower at 17,604.12, off a low of 17,382.79 and a high of 17,843.61.

The TOPIX index of all first-section issues dropped 58.59 points or 3.23 pct to settle at 1,752.74, off a low of 1,719.15 and a high of 1,785.05.

Hiroichi Nishi, equity chief general manager at Nikko Cordial Securities, said investors had been 'waiting for some trigger for adjustment.' A sharp rise in the yen also weighed on the market, he said. Nishi said that after a slight rise in the Shanghai market today, the Tokyo market had recouped some of its losses, but investors were waiting to see how the US and European markets performed.

Australian shares closed sharply lower following an 8.8 pct slump on the Shanghai market yesterday and the fall on Wall St, dealers said.

Dealers said few Australian companies avoided the negative sentiment today, including the index leading resource stocks BHP Billiton (NYSE:BHP) and Rio Tinto which have large exposures to the Chinese resource-led boom.

The S&P/ASX 200 closed down 161.3 points or 2.69 pct at 5,832.5 - now well below Monday's record close of 6,044.0. The index managed to end above the day's low of 5,786.8.

Over February, the key index remained up 59.1 points or 1.00 pct despite today's sell-off and continued to hold a 162.7 point or 2.9 pct gain for investors so far in 2007.

Hong Kong shares were sharply lower in afternoon trade in response to the falls in mainland China and Wall St, dealers said.

They said the budget speech of Hong Kong Financial Secretary Henry Tang provided good news with tax relief measures but failed to lift the market due to prevailing concerns over US and China bourses.

At 3.45 pm the Hang Seng Index was down 460.82 points or 2.29 pct at 19,687.05.

In mainland China, A-shares in Shanghai and Shenzhen closed sharply higher on the back of bargain-hunting after yesterday's slump, with property, telecom and power stocks leading the gainers, dealers said.

Nearly 200 companies closed up by their daily limits of 10 pct.

'The market was boosted by bargain-hunting interest after yesterday's plunge, as investors were reassured by the government's denial of a rumored tax on stock investment gains,' said Wang Mingzhi, an analyst at GF Securities.

According to the rumors, the government was to impose taxes on capital gains from stock investment income. The Ministry of Finance and the State Administration of Taxation announced today that there are no plans to levy such a tax.

Analysts said the slump yesterday is temporary and it will be a matter of time before the market picks up again.

'The slump is only a temporary thing. Soon people will realize that nothing has changed - liquidity is still abundant, the yuan is still rising and corporate earnings are still growing, so the long-term prospects are still promising,' said Wu Dazhong, an analyst at Shenyin Wanguo Securities.

The Shanghai A-share Index was up 114.99 points or 3.95 pct to 3,025.75 and the Shenzhen A-share Index was up 29.06 points or 3.94 pct at 767.35.

Seoul shares closed sharply lower on broad sell offs, with sentiment undermined by the sharp corrections seen across global stock markets, dealers said.

The market tumbled by nearly four pct to fall through the 1,400 point level at one stage, with downbeat current account and industrial output data fuelling the decline, they added.

The KOSPI index closed down 37.26 points or 2.56 pct, at the day's best level of 1,417.34. The low was 1,393.96.

10 Websites For Online Stock Traders

CNNMoney.com provides up–to–the–second news on the stock market, technology, jobs and economy, personal finance and more. The site also has articles and commentary that discuss strategy and investing tips from the popular magazines “Fortune,” “Money,” “Business 2.0” and “FSB”.

CBS.MarketWatch.com has the latest news on market data, portfolios, mutual funds and personal finance. You can join a discussion and share information with other investors or look at the Tools and Research page for the statistics on any given stock.

Investopedia.com is a database built for investors. Here you will find articles, a dictionary, tutorials and even a stock trading simulator.

NYSE.com
This is the official website of the New York Stock Exchange—a comprehensive resource for investors and issuers looking for news and information.

AMEX.com
This is the official website of the American Stock Exchange with all of the current information and news.

NASDAQ.com
The official site for the National Association of Securities Dealers Automated Quotations. Here you’ll find investor tools, news and more.

StandardandPoors.com
Standard & Poor’s is the world’s leading contributor of independent credit ratings, indices, risk evaluation, investment research, data and valuations.

StockCharts.com offers ShartCharts tools to create attractive financial charts, the Scan Engine instantly provides the market’s best investment opportunities and the Chart School is full of educational articles. Though some of this information is only accessible with a paid subscription, this is still a valuable source if you don’t have a subscription.

MoneyCentral.MSN.com
MSN’s MoneyCentral has articles and information on investing basics for the new investor and resources for the seasoned pro. Here, you’ll find current news, market reports and quotes. You can also watch business news clips from CNBC.

Forbes.com —“Home page for the world’s business leaders.” This is a vast library of up–to–date information. You can find anything from stock reports to information on travel to a guide to philanthropy.

Exchange-traded funds (ETFs): 5 smart strategies

ETFs: 5 smart strategies
Exchange-traded funds can cut your investment costs, lower your tax bill and simplify your life. Just make sure you handle them with care.

When Exchange-Traded funds, or ETFs, came on the scene in the 1990s, they looked like the rarest of new financial products - one that actually made money for you instead of just your broker.

The earliest ETFs emulated the Standard & Poor's 500 and other broad stock indexes. They were like traditional index funds, only better, offering the same one-stop diversification but with lower fees and tax bills.

As more financial advisers and small investors caught on to ETFs' advantages, the companies that issue them began expanding beyond major indexes to narrower slices of the economy such as health care and technology.

Again, the benefits to you were clear: Avoid the high management fees of sector funds and lower the risk that comes with picking stocks. It's no surprise that investment pros were soon calling ETFs the coolest thing to come along since, well, index funds, and predicting that ETFs would revolutionize the way you invest.

And then things went from cool to, like, crazy.

Not content to limit themselves to major market benchmarks, ETF sellers began churning out dozens of funds aimed at ever smaller market subsectors, including leisure and entertainment, networking and semiconductors.

The number of ETFs has ballooned from just 30 with $34 billion in assets six years ago to more than 200 today holding more than $300 billion. ETFs are quickly becoming a means of turning long-term index fund investing on its head, providing an easy way to make risky investments in whatever slice of the market happened to be hot five minutes ago.

Wanna invest in a nanotechnology or clean-energy ETF? You can -- although it's debatable whether you should. Ditto for that euro ETF you can buy if you believe that the value of the dollar will fall.

That doesn't mean ETFs are now so dangerous that they're only for the foolhardy. You can still cash in on their original promise if you ignore the hype and instead focus on how they might fit into your long-term investing strategy.

With that attitude in mind, here are five smart ways you can make the most of ETFs.

PLAN 1: Put a windfall to work

Payoff:Save a bundle on fees ETFs can be an excellent way to invest a large sum such as a 401(k) or IRA rollover, a bonus or some other windfall. Use ETFs for the portion of the money that you want to put into U.S. stocks, where ETF annual operating expenses are typically lower than those of comparable index funds.

Yearly fees for ETFs that give you broad exposure to foreign markets, on the other hand, are higher than what you'd pay for an index fund, while fees for bond ETFs and index funds are about the same.

One caveat: Because ETFs trade like stocks, you buy them through a broker, which means forking over a brokerage commission. That can eliminate ETFs' cost edge if you're making frequent investments or putting in small amounts.

PLAN 2: Create the "me" mix

Payoff: Diversify across all your wealth-producing assets With ETFs you can customize your asset mix in ways that used to be possible only if you built a complicated portfolio from scratch - or paid an adviser to do so.

Say you work for a financial services company that gives you stock options as part of your pay package. Between your salary and your options, you've already got a big piece of your future riding on the financial sector.

Instead of buying a broad market index that would give you even more exposure to the banking industry, you can assemble a portfolio of industry sector ETFs that duplicates the overall market while toning down or even eliminating its financial component.

Similarly, ETFs allow you to stress a particular investing style. If you're in or nearing retirement, for example, you might want more exposure to value stocks since they tend to be less volatile than shares of fast-growing companies.

In that case you might consider adding an ETF that tracks an index of value shares. Conversely, if you're a younger investor willing to assume more risk for higher returns, you could invest in an ETF that focuses on growth stocks.

Sound confusing? It needn't be. The ETF Allocator tool at the iShares website (ishares.com) will help you create a customized mix.
PLAN 3: Go a little farther afield

Payoff: A safer portfolio Diversifying beyond the traditional asset classes of stocks and bonds is a way to dampen a portfolio's risk. If you wanted more protection from inflation, for example, you could add an ETF that invests in natural-resources stocks or in TIPS (Treasury Inflation-Protected Securities), government bonds whose payments rise with inflation.

You can also gain an extra measure of protection by buying ETFs that specialize in areas that may be quite volatile on their own -- such as gold and emerging markets stocks -- but that can actually dampen a portfolio's swings since they often zig when the stock market zags.

If, on the other hand, you want to get more current income from your portfolio, you can buy an ETF that homes in on dividend-paying stocks or REITs (real estate investment trusts).

Here are some options:

For inflation protection, try iShares Goldman Sachs Natural Resources Index and iShares Lehman TIPS Bond.

For income, try iShares Dow Jones Select Div. Index and Vanguard REIT VIPER.

For still more diversification, try Vanguard Emerging Markets VIPER and iShares COMEX Gold Trust .

PLAN 4: Round out what you've got

Payoff: Higher returns with less risk ETFs make it easy to plug gaps in your portfolio. Say you own a lot of big-company stocks but nothing at the small end. You know that properly diversifying your investments lowers your risk and raises your returns, but you're not up to sifting through thousands of small shares, or even hundreds of actively managed funds.

By buying a small-stock ETF, you instantly get all the small-company exposure you need for a bit less than you'd pay for an index fund.

Conversely, if you're a small-cap enthusiast who figures you won't find many compelling bargains among the well-researched ranks of big companies, you can buy a large-company ETF to fill out your portfolio.

Even if you like investing in individual stocks, ETFs may be able to play a role in your portfolio.

If you pick individual large-cap stocks... ...buy Vanguard Small-Cap VIPER.

If you pick individual small-cap stocks... ...buy iShares S&P 500 index.

PLAN 5: Harvest a tax loss

Payoff: A big deduction come next April 15 ETFs can also help you do some tax maneuvering. Let's say you're sitting on a $5,000 loss in Dell shares but you still like the company's long-term prospects. You want to sell your stock to lock in the loss for the tax write-off, but you don't want to lose any appreciation in tech shares during the 31 days that the IRS "wash sale" rules say you must wait before buying back the stock.

Here's what you do:

You own a tech stock at a loss...sell the stock for the tax savings...buy a tech ETF...wait 31 days...sell the ETF...buy back the stock.

Walter Updegrave

An experienced investor is confident in his diversified stock portfolio

Get your bond fix - the easy way
An experienced investor is confident in his diversified stock portfolio - but where do bonds fit in?

NEW YORK (Money) -- Question: As aggressive savers and investors, my wife and I, who are 50 and 48 respectively, have accumulated a significant diversified portfolio of stocks. What we lack are bonds, and I have zero experience in this area. I put some money in a bond fund a few years ago, and it went down immediately. My wife and I are positioned to retire in five to 10 years, so I know we need some bonds to protect us in the event of a market meltdown. But I'm feeling intellectually paralyzed. Help! - Anthony S., Honolulu, Hawaii

Answer: I understand perfectly. When you were younger, so much younger than today, you never needed anybody's help in any way. But now those days are gone and you're not so self-assured. Now you find you've changed your mind, you've opened up the door.

Oops, sorry. That final plaintive plea at the end of your question hurled me into a Sixties time warp and suddenly I couldn't get the Beatles' "Help!" lyrics out of my mind. Not to worry, though. I'm happy to help you get your feet back on the ground - and your portfolio in shape for your looming retirement.

First of all, you should know you're hardly alone when it comes to being mystified by the workings of bonds. In many ways, the bond world is like looking through a Glass Onion where what we think of as economic reality gets distorted.

For example, most of us hate to see the economy go into recession. But the bond crowd, as the saying goes, likes a recession and loves a depression. That's because interest rates tend to fall in a stagnant economy. And since interest rates and bond prices are like two ends of a see-saw, falling interest rates mean rising bond prices - and rejoicing among bond investors (as long as companies and governments keep making those semi-annual coupon payments).

And then there are all those arcane terms: calls, premiums, discounts, coupon, zero-coupon, maturity, duration...it's enough to make you Cry Baby Cry.

Well, relax. There are plenty of ways to get the benefits you need from bonds without having to become a bond expert. That said, learning about how bonds work and what some of the lingo means never hurts. So before you do anything, I suggest you take a look at our MONEY 101 lesson on Investing In Bonds. You might also want to check out a bond site that, appropriately enough, is also called Investing In Bonds. Run by The Bond Market Association, the site has a lot of good tutorials and articles about bonds and plenty of data for people who want to get into the nitty-gritty of bond investing.

But let's Get Back to some specific Help! for you.

How much in bonds

Basically, between now and retirement you want to transition to a less volatile portfolio by dialing back the percentage of equities in your portfolio and increasing the amount in bonds. There's no specific figure for how much ought to be in bonds vs. stocks. But as a general rule, I'd say that by age 60 or so, you probably want somewhere between 40 and 50 percent of your portfolio in bonds.

As you age, you can then continue to increase your bond exposure, so that by age 70 your bonds represent 50 to 60 percent of your portfolio and by age 80 maybe 30 to 40 percent.

These are general guidelines. The figure that's right for you will depend on how much risk you're willing to take, what other sorts of resources you have (Social Security, other pensions, income from an annuity, etc.) and how much money you have (if you're really loaded and a short-term setback in the market won't seriously affect how much money you can draw from investments, then you can afford to be more aggressive, if you wish).

But the two most important things to remember are: first, you don't want to go into retirement with too aggressive a portfolio; and second, while there's a place for bonds in your portfolio leading up to and even after retirement, you still want to keep some of your savings in stocks in order to provide some growth to maintain the purchasing power of your portfolio.

Which bonds to buy

Okay, so what should you buy to get whatever amount of bond exposure you feel is right for you?

You could go with individual bonds, but generally that's a hassle and can be expensive unless you're investing, say, $50,000 or more. The exception is Treasury bonds, which you can buy directly from the U.S. Treasury, but even there I'm not sure it's worth the effort for most people, especially if you want to reinvest your bond interest payments.

So for most people I think mutual funds are the investment of choice for bonds. With funds, you could put together a portfolio of your own combining funds with short- or intermediate-term maturities that invest in government or high-quality corporate bonds and maybe even some high-yield bond funds.

But the easiest way to go - and a way I think makes good investment sense - is just to go with a total bond market index fund. You get virtually the entire investment-quality bond market in a single fund. And since you're buying an index fund, the annual expenses are extremely low, which is always a plus but particularly so for bond funds since higher expenses exert a bigger drag on bonds' generally moderate returns.

(For recommendations of specific funds you might consider, see the bond funds in the MONEY 65.

You don't have to pull off this move into bonds all at once. In fact, you're better off making the transition over several years. You can start by putting any new investment dollars into bonds. If it appears this approach isn't going to give you enough bond exposure by the time you're ready to retire, you can always start selling some of your stock funds and plow the proceeds into bonds. You can do this as part of the process of annually rebalancing your portfolio.

To the extent you can, try to confine these moves to tax-deferred accounts like 401(k)s and IRAs so the Taxman doesn't siphon off any profit on the sales. But if you must sell stocks or stock funds in taxable accounts, then look for opportunities to mitigate the tax bite by selling shares that will trigger losses or only small gains.

If you do all this over the next five to 10 years, I've Got A Feeling things will Come Together quite nicely and, financially at least, you'll be Free as a Bird in retirement.

Walter Updegrave

Look beyond the biggest stocks in the biggest markets

Time to see the world in a new way
International mutual funds can do a lot for you, but it's easy to head off in the wrong direction. Hint: Look beyond the biggest stocks in the biggest markets.

Until recently.

Nearly $130 billion has poured into overseas stock funds this year, more than five times the amount invested in U.S. equity offerings. A lot of that is just performance chasing, since foreign stocks have trounced domestic ones over the past three years thanks to faster overseas growth and a falling dollar.

But chances are you need to invest even more in foreign markets, and it wouldn't hurt to be a little more adventurous about it too.

Just as American tourists tend to flock to the familiar big names such as London, Paris and Tokyo, U.S. investors are sending almost all of their money to those markets as well. That's no way to really see the world - and it's no way to invest in it either.
Increase your stake

As recently as five years ago, many investment advisers recommended stashing just 10 percent to 20 percent of your stock portfolio in international funds. Most of us don't come close to that small amount. In a recent survey, for example, Fidelity found that two out of three of its 401(k) plan investors did not hold a single overseas equity fund.

That shortfall is especially worrisome today, when pros recommend putting 25 percent to 35 percent of your equity portfolio in foreign stocks. "The U.S. accounts for only half of the world's market capitalization," points out Anthony Ogorek, a financial adviser in Williamsville, N.Y. "And overseas economies are growing faster than in the U.S., so that's where the best returns can be found."

Foreign funds also give you a way to hedge against the U.S. dollar, since they hold companies that earn returns in overseas currencies. When the dollar is weak, as it has been lately, you get a boost when those returns are converted into U.S. greenbacks. The reverse is true when the dollar strengthens.

Look beyond large-caps

There is no question that large-cap overseas funds make great core holdings. By owning shares of huge multinational companies, these funds are a relatively safe way to play overseas markets, which is why they have become a staple of 401(k) plans. But if you stash your entire overseas allocation in large-caps, you won't get the full benefits of international diversification.

"In today's globalized economy, the financial markets of developed countries have become more closely tied than before," says Yale finance professor William Goetzmann. "So the stocks of big companies tend to perform in the same way, no matter where they're headquartered."

A U.S. money center bank such as J.P. Morgan Chase, for example, isn't all that different from Germany's Deutsche Bank. Both operate overseas, and they have similar reactions to global economic moves.

Moreover, if you restrict your international investing to large-cap funds, you will miss out on large swaths of the world's markets, as well as some of the best returns. That's because these funds invest the bulk of their assets in a few developed countries while holding little or nothing in emerging markets.

Get off the beaten path...

One way you can diversify beyond foreign large-caps, suggests William Rocco, a senior analyst at Morningstar, is to invest in a small-cap and midcap foreign-stock fund. These offerings mainly buy shares of companies with stock market values of $8 billion or less that trade in developed countries, although many invest a small stake in emerging markets as well.

Just as with U.S. small stocks, foreign small fry tend to grow faster than their large-cap siblings.

And because small companies typically get most of their sales locally, they are more closely tied to their country's economic growth than to global markets. That provides you with greater diversification.

Small-cap foreign funds are more risky than foreign blue chips, however, so put no more than 5 percent to 10 percent of your stock portfolio in one.

A top choice: T. Rowe Price International Discovery (PRIDX (Charts), which is on our Money 65 list of recommended funds. Recently the fund's top stakes included $2.5 billion Soitec, a French producer of silicon chips, and Financial Technologies, a $2 billion Indian developer of trading software.

...Or go even further

If you're the adventurous type, consider a diversified emerging markets fund, which holds the stocks of companies in developing countries. With these funds you have the potential for bigger returns - and bigger losses. It's not unusual for emerging markets to plunge by as much as 20% in a month, as they did earlier this year, before rebounding.

Invest no more than 5 percent of your equity portfolio in these funds. On our Money 65 list, we recommend SSgA Emerging Markets (SSEMX (Charts), as well as Vanguard Emerging Markets Stock (VEIEX (Charts), an index fund that is also available as an exchange-traded fund (VWO (Charts).

Once you have arrived at an asset mix that suits your goals, it's important to keep your expectations in check. Since overseas equity funds have had a tremendous run, chances are their returns will cool down, but no one can really say when. So be prepared to hang on.

And remember, experienced world travelers are ready to cope with any change in the climate.

By Penelope Wang, Money Magazine senior writer

Building a business

This family has aggressive financial goals but a conservative mix of stocks and bonds. Their goal: retire from their corporate jobs in a decade.

NEW YORK (Money Magazine) - When Doug van Almelo's job as an airplane mechanic was transferred from Los Angeles to Indianapolis after Sept. 11, he and his wife Carole saw it as a chance to start over.

"With the high cost of living and the fast pace, it was hard to set aside money and time," says Carole, who runs her own Web design company.

Thanks to lower housing costs in the Midwest, the couple were able to use the proceeds from the sale of two homes in California to pay off all their debts and seed a $300,000 portfolio.

Determined to build up their investments even faster, they drastically cut their living expenses, hoping to save half of their six-figure salaries. Their plans hit another bump, however, when Doug was laid off in 2003.

Then, after working as a contractor for a year, he was called back to his old job - in Los Angeles. Now, Doug, 49, commutes home every three weeks for a two-day stay.

In two years, Carole and sons Alex, 15, and Nicholas, 11, will join him on the West Coast. "It's difficult, but we look at this as an opportunity to really save for all of our futures," says Doug.

Still, the van Almelos are eager to leave the corporate world behind and strike out on their own. Within 10 years, Doug wants to retire from his airline job. At that point, he and Carole, 48, hope to buy a small business or farm and work together in a second career.

Where they are now

Despite the fluctuations in their income over the past few years, the van Almelos have managed to build their total portfolio to $400,000, which includes $100,000 in 529 plans for the boys.

The rest of the money is spread among IRAs, 401(k)s and taxable accounts, with 35 percent in bonds, 39 percent in large-cap stocks and 20 percent in international equities. They also have $20,000 invested in a handful of individual stocks, including Google and Apple.

When they return to L.A., the van Almelos figure they'll buy a small condo, which should keep their housing costs roughly in line with what they are in Indiana.

Though he no longer gets a pension from his airline, Doug is socking away 20 percent of his pay in the company's 401(k), and Carole maxes out her Roth IRA. Luckily, Carole's parents have offered to help pay for the boys' school expenses, so they no longer need to add much to the 529s.

Carole and Doug have weathered several financial storms the past few years and have recovered admirably, says Indianapolis financial planner Walt Koon. But starting a new business at 60 is ambitious, especially considering that neither has a pension, Carole works for herself and Doug is in a volatile industry.

What they should do

The van Almelos' best shot at hitting their goal, Koon says, is to save as much as possible outside their retirement plans before they leave their traditional jobs - and to be far more aggressive in their investment strategy.

Right now about a third of the van Almelos' money is in Dodge & Cox Income (DODIX (Charts), a long-term bond fund. "A bond fund is for capital preservation. But at their age, they still need growth," says Koon, who recommends that they reduce bonds to just 9 percent of their portfolio.

He'd also like Carole and Doug to sell their individual stocks and pare back their stake in large-cap funds from 39 percent to 35 percent.

They should use some of that money to boost their stake in international stocks as well as mid- and small-cap domestic equity funds, which are more volatile than large-caps but historically have higher returns.

They can keep a lid on costs by selecting Money 70 index funds such as Vanguard Small-Cap (NAESX (Charts) and iShares MSCI EAFE (EFA (Charts).

"When it's crunch time, we've always been able to save money," says Doug. "I think we can stretch a bit more to fund our goals."

By Donna Rosato, Money Magazine staff writer

Oil plunges below $51

Crude hits 19-month low after Saudi minister says cuts working, no need for an emergency OPEC meeting.

LONDON (Reuters) -- Oil prices plunged more than 3 percent back near $51 a barrel Tuesday after Saudi Arabia said OPEC production cuts were working well and that there was no need for an emergency meeting of the producer group.
U.S. light crude for February delivery tumbled $1.78 to $51.21 a barrel after touching $50.93, the lowest since May 2005, in earlier New York Mercantile Exchange trading. In London, Brent futures shed 82 cents to $52.30.
The price of crude has plunged more than 16 percent this year in part due to warm weather in the Northeast, the world's top heating oil market, in early January.
The selloff comes as some other commodities have come under pressure - which could lead to further selling down the road.
"We took measures in October in Doha and measures in Abuja (in December) and I believe these measures are working well. Inventories in the fourth quarter have come down ... which puts the market closer to balance," Saudi Oil Minister Ali al-Naimi said in New Delhi.
"Do not panic. Actually there is no reason for a meeting."
The Organization of the Petroleum Exporting Countries (OPEC) agreed to cut 1.2 million barrels per day (bpd) of output from Nov. 1 and then to cut another 500,000 bpd from Feb. 1.
There had been speculation OPEC could hold an emergency meeting before its next scheduled conference on March 15.
Venezuelan Energy and Mines Minister Rafael Ramirez has said oil prices had fallen "too much" and that he would favor an extra meeting.
Other commodities have also had a rocky start this year and base metals fell in early trading Tuesday before stabilizing around midsession.
"We should not underestimate the global mood on commodities," said Frederic Lasserre of SG CIB in Paris. "There is not as much appetite for commodities anymore."
He predicted oil prices would test $50 in the near term, but then fresh buying interest could emerge.
Analysts said OPEC would also brake the slide and deeper price falls could drive the cartel to implement further cuts.
"We don't really see a collapse in prices. The further it goes down, the more hesitant the market will be about going even further," said Eoin O'Callaghan of BNP Paribas. "OPEC still has an impact on the market."
Stocks of oil majors fell across the board Tuesday.
Shell (down $0.41 to $67.40, Charts) lost 0.6 percent;
Exxon Mobil (down $1.09 to $71.57, Charts) slid 1.4 percent;
ConocoPhillips (down $1.02 to $62.81, Charts) retreated 1.4 percent;
BP (down $1.52 to $63.12, Charts) was down 2.2 percent.