By Sandra Pesmen —

We recently attended several financial seminars given by different money management firms to gather information about handling money when you’re grieving. Our goal is to help people during a time when it’s difficult to make wise decisions about anything, including money.

One of the most important things I learned is that people who depend on fixed incomes, which includes many widows and widowers, are definitely in FEAR mode right now as we watch the Dow bob up and down on CNN.

You’re forgiven if you want to rush to your broker, sell everything, and bury the cash in your backyard. But be cautious about doing that.

“Remember, the dog can dig it all up and scatter it,” warns one of these experts. “Instead you should think ‘long-term investing.'”

To begin, sit down and re-examine your portfolio with a qualified financial advisor and make sure your portfolio is well diversified. (They call it “asset allocation.”) During these unpredictable times, you probably want more securities (bonds) than equities (stocks).

One of the first rules is never have more than 25 percent of your holdings in one industry, and never have more than 20 percent in one stock. “Even if a stock has a great record, and you’ve watched it go up, up, up over the years, remember that if it can take the staircase up slowly—it can ride the escalator down swiftly… think Enron,” said one of the speakers.

All these specialists advised being very careful about buying annuities because there are so many different varieties. While some can be beneficial for seniors, others are not. Be sure also to get the opinions of your accountant and lawyer about any of them.

There’s no way during tough times to be completely safe, the speakers all admit, but they agree that some investments, such as some CDs, Treasury and Municipal bonds can be less risky than others.

One step many people can safely take to increase current income is to stop reinvesting stock dividends, and transfer that money into your portfolio for income.

“Most people don’t realize when it’s time to change that reinvestment strategy to income,” noted one of the brokers. “But when you do, make sure you don’t take more out of your account each month than you really need because you will be taxed on that. The portion you leave in your IRA or trust gathers interest without taxes.”

For example, if the portfolio brings in $3,000 in income from dividends, and you only need $1,000, don’t take it all out of your account because then it would all become taxable.

Sandra Pesmen is host of The Widows List Visit Sandra there for more discussion of this topic.