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Harris Helpful Hints

Recession-Proof Your Finances

CHICAGO, April 29, 2008 – Grim predictions from economists and continuing turmoil in equity markets have led many people to ask, “What can I do to protect my finances?” In these turbulent times, there are two areas that everyone should examine – their personal finances and their investment strategy.

Mark Johannessen, managing director of Harris SBSB and president of The Financial Planning Association, offers these tips in Personal Finance:

1. Have a safety fund. A good rule of thumb is to have three months’ worth of expenses tucked away in case of a sudden job loss or illness.

   “With the stimulus checks in the mail, this is the ideal time to see if that windfall could be best used to help build a small nest egg, rather than spending it to feather the nest,” says Johannessen.

   This also means that if you don’t have a monthly budget, or at least a good idea of what you typically spend in a month, now is the time to go through banking and credit card statements and determine what you’ve been spending so you know how much you need to have in reserve.

2. Speaking of credit cards, don’t miss a payment. Paying off the balance of your credit cards in full each month is a very good idea. However, if your cash flow has slowed, be sure to pay at least the minimum amount due on time to protect your credit score. When you feel more secure in your financial situation, then you can make paying down debt your first priority.
3. Make sure you can stay the course. Once you’ve made an investment, be sure you can keep your money there and still meet your bills in the short term. Many individuals find themselves caught short when a large expense comes due. They are then tempted to make decisions that will hurt them long term, such as raiding a 401k. If you know that you will need a new car in the next year, it might make sense to put the money you’ll need for a down payment into something like a 6-month CD rather than a Roth IRA, for example.

Jack Ablin, chief investment officer of Harris Private Bank, offers the follo wing hints on investment strategies during a downturn:

1. Check that your priorities are in line with your investments. Conditions in the marketplace are very different today than they were even six months ago. Chances are your investment strategy was built according to how you felt about your job, health, family situation, and the market as they were at that point. Since any of those things could have changed, your tolerance for risk in your portfolio may also have changed. Growth is usually achieved through investments that are higher in risk. If your priority is now to protect what you have, you may need to talk to your financial advisor about how to reduce risk.

2. Diversification takes the sting out of downturns. By having exposure in your portfolio to many areas of the marketplace you are more likely to have some that are up, while others are down.

3. Look for defensive investments that are relatively cheap by historical standards. “From an investment perspective, we recommend investors favor defensive sectors like consumer staples and health care,” says Ablin. “While consumer discretionary shares are cheap and beginning to show signs of life, we suggest investors be wary of consumer products that require debt financing for purchase.”

• Consumer staples, due to the relatively inelastic demand for their products, present an advantage in an environment where consumers cut back. The economy has little impact on how much toothpaste and tobacco are consumed.
• In a downturn, healthcare stocks are a good line of attack. With healthcare shaping up to be a major election year issue, they may wobble a bit in the next year, but the aging of America’s population will continue making this sector an important one to wa tch.

Harris has been helping its customers and the communities it serves for over 125 years and has more than 230 full-service locations and more than 600 ATMs in Illinois and Indiana.

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Harris is an integrated financial service organization providing more than 1 million personal, business and corporate clients with banking, lending, investing and wealth management solutions. The organization is a member of the BMO Financial Group (NYSE, TSX: BMO), which also provides corporate and investment banking services in the U.S. under the BMO Capital Markets name. For more information, please visit www.bmocm.com or www.harrisbank.com.

Harris^® is a trade name used by various financial service subsidiaries of Harris Financial Corp. Banking products and services are provided by Harris N.A., The Harris Bank, N.A. and their bank affiliates. Members FDIC. Brokerage products are offered through Harris Investor Services, Inc. (HIS), a registered broker/dealer, member FINRA/SIPC, and SEC registered investment adviser. Insurance and annuities are offered through Harris Bancorp Insurance Services, Inc. (HBIS). Securities are provided by BMO Capital Markets Corp. (BMOCM), a registered broker dealer and member NYSE, FINRA and SIPC. HIS, HBIS and BMOCM are affiliated companies and are wholly owned subsidiaries of Harris Financial Corp. Products offered by HIS, HBIS and BMOCM are Not Insured by the FDIC or any Federal Government Agency, Not a Deposit of or Guaranteed by Any Bank or Bank Affiliate, May Lose Value. The purchase of insurance or an annuity is not a condition to any bank loan or service. F inancial planning and investment advisory services are provided by Sullivan, Bruyette, Speros & Blayney, Inc., an SEC registered investment adviser. Family Office Services are provided by Harris myCFO, Inc. Investment advisory services are offered by Harris myCFO Investment Advisory Services LLC, an SEC registered investment adviser and wholly-owned subsidiary of Harris myCFO, Inc. Not all products and services are offered in every state and/or location.