It’s Time to Bail Out of Stocks When Long-Term Goals Become Short-Term

Q My lovely daughter is a high school senior and about to enter college. My broker moved some of her college fund into bonds, but I’m wondering, with the markets as they have been lately, whether we should move a little bit more out of stocks. We have enough money in her fund to cover all four years. What would you suggest?

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A Hear that whooping sound? That’s the fire alarm that says, “Get out now!� It’s been going off for some months now--and would have been whether or not the stock market tanked.

You should never, ever, have money tied up in stocks that you’re going to need within a year or two. Many financial planners would say it’s not too smart to have money in stocks that you may need within the next five or even 10 years.

The money for this fall’s tuition should have already been sitting safely in a money market fund. You can put the rest in bonds if you’d like, transferring each year’s tuition payment to the money market fund one to two years before you’ll need it. You always run the risk that higher interest rates will erode the price of bonds, but bonds are less subject to wild swoops and dives than stocks.

It’s great to be a long-term investor, but that doesn’t mean you should keep money at risk when you don’t have to. Just think what might happen if you leave the college fund in stocks and the market continues to plunge. Weigh the possibility that you could earn a few more bucks against the daunting prospect of having to tell your lovely daughter that she now has money for three years of college, or two, instead of four. That should make the decision for you.

Financial Privacy

Q Recently I received a “privacy notice� from a bank that we last did business with several years ago. If I understand what is written, unless I call the listed 800 number to opt out, it will share our information with other companies--and that concerns me deeply. Our last experience with this bank was unpleasant and we would never, ever consider banking with it again, or with any company that does business with it. I called the 800 number and got a message that they were unavailable and to call back later. What should I do if the company doesn’t cooperate?

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A A law Congress passed in 1999 gave you the right to tell your bank and other financial institutions not to share certain information with other companies.

The privacy notice you got is just one of many you will probably receive, because the law applies to banks, savings and loans, credit unions, insurance companies and brokerages. Retailers and auto dealers that collect and share individuals’ financial information also are covered.

It’s important to pay attention to these notices, because many give you a time limit--typically 30 days--when you can opt out of having your information shared. Some provide toll-free numbers; others require that you opt out by mail.

If your attempts to reach them by phone don’t work and you weren’t provided with an address, you can contact regulators to complain. Which regulator you should call depends on what kind of bank it is. The Federal Deposit Insurance Corp. offers information about who regulates what on its Web site, https://www.fdic.gov, or you can call (877) ASK-FDIC.

The FDIC also has a consumer newsletter. It devotes its latest issue to everything you ever wanted to know about this new right to privacy. Call (800) 276-6003 or e-mail [email protected] for a copy or to sign up for a free newsletter subscription.

401(k) Contributions

Q My wife has a 401(k) plan with a small printing company. On occasion, her employer has delayed depositing her contributions into her account, sometimes holding on to the money for more than a year. Does my wife have any recourse?

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A Absolutely.

Companies are required by law to deposit retirement contributions within 15 days after the close of the month in which the money is deducted from an employee’s paycheck.

But some employers flout the law so they can make interest-free use of their workers’ money--and that’s illegal. Your wife’s company shouldn’t be using her money to make payroll or to pay vendors, but chances are good that’s exactly what it’s doing. Meanwhile, she’s losing out on the tax-deferred growth she could be getting if the money were deposited promptly.

Call the Pension and Welfare Benefits Administration, a division of the Department of Labor. You’ll find the number in your local phone book.

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Liz Pulliam Weston is a personal finance writer for The Times and a graduate of the personal financial planning certificate program at UC Irvine. Questions can be sent to her at [email protected] or mailed to her in care of Money Talk, Business Section, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012. She regrets that she cannot respond personally to queries. For past Money Talk questions and answers, visit The Times’ Web site at http://ukobiw.net/moneytalk.