Top tips: Spotting opportunity in a down market

By Gerri Willis, CNN

We've been hearing how bad the economy is and how a recession is looming. But before you start hiding your money in your mattress, remember there are opportunities in a down market.

1. Silver Lining for Homebuyers

While it's true housing values have come down - dramatically in many places. And likely home prices are heading lower. So, if you're in the market to buy, now is the time to start the process. Start to look at markets you're interested and gauge your local real estate market.

The other good news is for first time home buyers looking for a traditional mortgage. Both the 30- and 15-year fixed-rate mortgages are at their lowest levels since July 2005, according to Freddie Mac.

Even if you're not buying a home, there's good news. Rent prices aren't really moving up much at all. According to data from and, the median rent check barely moved at all. In some cities like Washington, Phoenix and Miami, rents actually fell dramatically.

2. Know your history

We know how scary it can be if you have a 401(k) or you're holding mutual funds and you've been watching the market tank. But don't try to time the market. It's a losing bet. History shows that stocks pick up during a recession. Bottom line: The stock market is a forward-looking indicator. If you're a long-term investor, you will be able to ride out the bumps.

3. Get the most for your money

Generally when the Fed is in a rate cutting mode - as it seems to be recently - interest rates on CDs go down. But that's not happening. The subprime issue is getting in the way of typical pricing.

But you could benefit. Short term CD interest rates, and we're talking 3- or 6-month CDs, are yielding the same or even higher interest rates than 1-year or even 5-year CDs. That's because banks are trying to raise some money through the CD market.

If you don't want to keep you money tied up for a few months, you can also consider high-yield money market accounts. Some Internet banks are offering rates close to 5 percent. If you want to check out some of the highest CDs and money market rates, go to

4. Stock sale

Stocks are cheap right now. And the easiest way to get into the market is through index funds or exchange traded funds - or ETFs. Check out Vanguard or Fidelity for low-cost options.

Some people are very excited about the Magellan Fund reopening to investors. This was a members-only mutual fund for a decade. This fund is up almost 19 percent in 2007 and that beats out the S&P 500 by 13 percent.

But that said, you should really do your homework before investing in any fund. Talk to your financial advisor and also check out


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