Financial light at the end of the tunnel could be 2015

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Editor’s Note: Suze Orman will be on AC360° tonight at 10pm ET to discuss how to keep your money safe.  Check out her new partnership with the FDIC at myFDICinsurance.gov. On that site you can use her calculator to make sure the money you put in the bank is safe, and backed by the FDIC. Suze was interviewed on CNN earlier today. Here's what she had to say:

Suze Orman
Personal Finance Expert

Q: How worried should people be right now? Not only about stocks but mutual funds, portfolios, 401(k)s, jobs?

They should be worried about everything. And they should be so worried, not that we should start a panic, that they really start to truthfully change their behaviors.

They have to realize that nobody is joking here. They can’t continue to go out to eat, charge it on a credit card and then just pay the minimum at the end of the month. They have got to go into a different type of financial mentality,

I have to tell you, I don’t think that has sunk into them yet. so a few more days like this a few more things coming down the pike, they may go ‘oh, my God, we may be in serious trouble here.’

Let’s start with bank accounts. If you are within the FDIC limits of a bank account, if you happen to be at a credit union, if you’re within the limits of the NCUA (National Credit Union Administration), you have to understand your money is absolutely safe and sound. The $100,000 per account.

Here’s what everybody needs to do, especially with FDIC…  
Go to myFDICinsurance.gov, use the calculator program they have, so you know... without a shadow of a doubt... that your money is insured. You cannot take somebody else's word for it. You need to worry. So just take a few steps to make sure that your money is in institutions that are insured; you are within the insured limits and that that money is safe and sound if you are, this doesn't matter to you in that way. If your bank fails, the FDIC will step in. They have the money. They'll be there for you.

As for portfolios, mutual funds, bonds and such … there you’re seeing a situation where we’re going down, down and down. If you have 10, 20, 30 years until you need the money and you invest in good quality stocks, mutual funds, exchange traded funds, you have to continue to invest. You have to continue every single month going into the investments that you’re in if they’re good.

However, if you are older, and counting on this money (you need this money for retirement) that is money that never should have been in the stock market to begin with.

Your rule of thumb is money that you need within ten years is not money that belongs in the stock market because of the deterioration we have seen and will continue to see if they do not get their act together.

If you think this day was bad, what you may see if these people, the administration, do not get their act together so to speak… you could see another 2,000, 2500 points (lost).

Q: Should you move your money to T-Bills?

Not now if have you time on your side. This is when you continue to invest. However, if you need this money, this is all the money that you have you are counting on it next year to do something with, yes, you have to come out at this point in time because you can’t continue to wait anymore. You never should have been in to begin with.

Some people see a deep recession coming that could last a year, maybe two years. As bad as the markets might be right now, a year from now they could be worse. Why not take that money and move it to T-bills right now and a year from now go back and start investing? Because it is impossible to time the market.

If you had invested the day before September 11th, if you invested the day before in 1987, the market went down 22%, you would have been up considerably ten years later. Even if you invested right before those big drops. Don’t try to time the market. Just be consistent with your investing. For those of you again, who are afraid, you might want to the transfer your money, however, that’s in stocks that keep going down that aren’t paying you a dividend and possibly go into individual good quality stocks or exchange-traded funds that do pay you a dividend. You can get 4, 5, 6% with some secure stocks, some secure exchange traded funds so at least you’re being paid to wait. But you can’t time the market. You’ll never win at that game.
So when will the market and the economy turn around? How long is this down cycle going to last? Probably two, three, four years. I don’t want to say what I’m about to say. I don’t think you’re going to see a lot of light at the end of the tunnel until about the year 2015.

We have a number of years to go. However, somebody’s got to be able to make a decision and since everybody can tell that will people in charge here can’t make decisions for you, you’ve got to make decisions for yourself. You’ve got to stop charging things on your credit card. You’ve got to stop spending money on things you don’t need. You know? you’ve got to understand this is very serious, people. You’ve got to start acting like it’s serious because it is. But if people are still investing in their 401(k)s, why not change those investments as opposed to mutual funds and bonds or stocks or whatever and just have the money invested in t-bills or money market accounts?

Because as we saw a little bit ago when they did certain things, you saw in June, you saw certain bank stocks rally 30% 40% and so as the markets go down, as you continue to invest dollars in things that are less expensive, you buy more shares. The more shares you have in the long run, the more money you make when everything turns around.

So if you aren’t putting your money in today while the prices are getting cheaper and cheaper every month not all at once but every month as long as you have 10, 20, 30 years or longer, you won’t be able to take advantage of accumulating more shares. You’ll lose in the long run. So while it sounds like, it’ll keep my money safe and sound and not worry about it, I don’t know. There are some great buys out there. There’s great things to be doing with your money as long as have you time on your side.

Everything’s on sale right now. That’s what the government’s doing. They are buying everything that’s at a tremendous sale and bailing out anybody, they are investing in assets that are so cheap right now i wish we could invest in those. But the average person watching, they don’t know about these so-called bargains out there. I agree. There are a lot of the bargains out there.

You have to be a sophisticated investor to know what’s going on. That’s why you have to have a little trust here right now that if we do this investment plan and they have to stop calling it a bailout plan, if they are allowed to do this plan, eventually you’re going to see the mortgages will get paid off. You’ll have some ownership in it.

The taxpayers will be paid back and in the long run, we should be okay. If we continue to let the markets freeze, these credit markets it is possible one day you go to your ATM, and nothing’s going to come out. You can use your credit card and not going to be able to use it.

Q: Do you think the House should have passed the bailout bill?

You bet I do.