DEAR BRUCE >> In a recent column you responded to a 58-year-old woman on Social Security disability who said she lost a lot of money in the stock market in 2000. You said she would have recovered and made a profit if she had stayed in the market. I stayed in the market and lost thousands of dollars on financial and tech companies that have never recovered. How do we ever recover?

— J.b.

DEAR J.B. >> I understand your concerns. You mentioned you did what I also did — stayed in the market. But you lost thousands of dollars on companies that have never recovered, and that's very possible. Assuming all the other stocks you were holding, or most of them, have recovered and shown a profit, chances are that on a net basis you're probably back to where you should be. And if you haven't folded the losing stocks, it's likely that one day they will come back, too.

On balance, I stand by my advice. If you don't sell when the market is going down and you have a reasonable period of time left, the likelihood is that the market will recover and you will end up ahead of the game. You only lose when you sell.

DEAR BRUCE >> I live in Georgia. Are both IRAs and 401(k)s protected in case of a lawsuit?

— S.M.

DEAR S.M. >> In almost every case, your IRAs and 401(k)s are protected in the event of a lawsuit, and it has nothing to do with what state you're in. There are exceptions, but they are quite rare; generally speaking, you've little to concern yourself with.

DEAR BRUCE >> I know I have seen this question before in your column. Is it better to close credit cards or pay off the balances?


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— Reader

DEAR READER >> This is a relatively simple question to answer. You are far better off not to close the cards and just pay off the balance. When you close the cards, you are reducing the amount of credit available to you, and therefore, you've effectively reduced your credit score.

In other words, say you had five cards and each one allowed you $10,000 worth of credit ($50,000 in all). When you pay them off, that's good, but if you close them, now you shut yourself off to that credit, and that will adversely affect your credit score.

In short, pay off, but keep open. Paying off your credit cards is the key to success.

Send questions to bruce@brucewilliams.com. Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.