OK, question for the financial whizzes out there:

I occasionally help a senior citizen manage his finances (he is disabled and nearly blind, etc.).

He has several looooooongstanding IRAs and other investments, some of which are tied to the stock market. He’s had these for decades.

Basically, his “portfolio” has gone up and down with the Dow over the years. And, needless to say, it has gone down down down over the last 12 months.

All of his investments are classified as “conservative” in nature — i.e. the least risky kind of investment/IRA. So they don’t fluctuate wildly — just follow the general trend of the Dow.

Now, he’s old enough the remember the Great Depression, and he’s starting to worry that this downturn won’t ever bounce back — that the stock market will literally hit bottom, that all the financial institutions will go bankrupt, and he will lose all his money. So he’s wondering: Should he take out his (diminished) money now, and put it into FDIC-insured banks? Or do what I have until now been recommending: ride it out. Things may go down, but surely, either in two years or five years or ten years, it will go back up.

Important note: All the financial institutions which are handling these investments are well-known, top-notch, non-flaky companies — you’ve heard of them all.

I tell him that if he sells off his investments now, he’ll be “locking in the losses,” and it would be better to “ride it out.” Because he doesn’t need the cash now — it’s his nest egg. And he’s comparatively healthy — he’ll be around for several more years, undoubtedly.

What would you advise?