Net Worth Advisory Group of Salt Lake City, Utah, Releases Four Tips to Help Every Investor

Aug. 16, 2010 - PRLog -- The S&P 500 (an index representing large cap stocks) was down over 37 percent in 2008, but recovered 27 percent in 2009. At times during the first half of 2010, the index was up 10 and down 6 percent. Understandably, people are concerned about the security of their retirement accounts. Here are four tips to staying on pace to enjoy the retirement you’ve envisioned.

1.   Utilize Retirement Simulators

Investment circles call the 2000’s “The Lost Decade.”  The S&P 500 achieved an annualized return of -.99 percent during this ten-year period. This put many baby boomers behind their personal savings goals. Consequently, investors must now re-evaluate their retirement plans and make adjustments. People may need to save more, delay retirement, or reduce their anticipated standard of living. Retirement calculators can illustrate where you currently stand compared to your goals. They can be found online, or a fee-only financial planner can perform these calculations.

2.   Review Your Risk Tolerance

Now that the market has recovered much of 2008’s losses, now is a great time to reconsider your tolerance for risk. If you have a hard time sleeping due to recent market declines, perhaps your investment portfolio is too aggressive. Most financial professionals have great tools to identify an asset allocation of stocks, bonds, and cash that will maximize your chances of reaching investment goals while providing increased stability. This tip will spare you the stress of checking market updates every hour.

3.   Rebalance Annually

After a period of volatility, investors must rebalance their portfolios. If a portfolio was 50 percent stocks and 50 percent bonds at the beginning of 2009, that ratio is likely closer to 60/40 today. Thus, the portfolio is currently more aggressive than it was designed to be. Further, because mid cap and small cap stocks have performed better than large cap and international stocks, most portfolios are currently not as balanced as investors might think. Rebalancing annually will ensure appropriate diversification.

4.   Leave Emotions at the Door

Investors can’t afford to make rash decisions concerning retirement accounts. It’s natural to consider selling after the DOW falls 300 points. However, an investor must recognize that in doing this, it is almost a guarantee that the investment was purchased at a high price and sold at a discount. Buying high and selling low is an investment strategy that will quickly fail. Rather than making decisions based on emotion and fear, investors should have a long-term investment strategy and stick to it, in both good times and bad.

Is It Worth It?

Some people consider investing in only money market accounts – they just don’t want the stress that accompanies investing in stocks. However, money markets currently earn less than one percent, and actually lose money after inflation. Meanwhile, a portfolio consisting of 60 percent stocks and 40 percent bonds diversified across large, mid, small, and international companies returned 4.75 percent annually during the 2000s. Most of us need this extra return in order to meet our retirement goals. If you doubt your ability to follow these tips, hire a fee only financial planner to look out for your best interests.

For more information, visit http://www.utahfinancialadvisor.blogspot.com.

About Mr. Jefferies

Lon Jefferies is an investment advisor representative with Net Worth Advisory Group, a fee-only financial planning firm in Salt Lake City, Utah. He is a member of the National Association of Personal Financial Advisors (NAPFA) and a candidate for CFP™ certification. He possesses an MBA and bachelor's degrees in Finance and Marketing from the University of Utah. Lon writes articles for local magazines such as Business Connect and Utah Business Magazine, and he consistently contributes articles to online magazines such as FIGuide.com and FILife.com (by The Wall Street Journal). Additionally, Lon is a platinum expert author at EzineArticles.com. Lon has been quoted nationally in publications such as the NY Times and Investment News.

Contact Info

View Lon's blog at http://www.utahfinancialadvisor.blogspot.com, and visit Net Worth Advisory Group's home page at http://networthadvice.com. Lon can be emailed at lon@networthadvice.com, or phoned at (801) 566-0740.

# # #

Fee-Only Financial Planner
Net Worth Advisory Group
6975 Union Park Center, Suite 465
Midvale, UT 84047