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Articles: Five steps for long-term investing

Face the facts: Even if you are healthy now and in your prime working years, nothing lasts forever. At some point, you will no longer be able to work, or want to work, due to health conditions, age or the economy, or all three. That is why it is critical to “marry” long-term investment strategies to retirement planning.

In addition, you cannot depend on Medicare, Social Security and other government-based programs to comfortably sustain you through retirement. The strain on these programs will only increase as the Baby Boomer generation swells the rolls. Also, no one knows exactly what the future holds. Will you incur substantial medical expenses? Will you face other economic difficulties? Long-term investment planning can provide some peace of mind.

Although every situation is different, here are five practical steps to follow.

1. Set your goals. This requires an analysis of certain aspects such as your intended retirement date, the amount of money you hope to have in retirement, the amount to invest on a regular basis and how you expect to attain your goals. Write down the goals on paper so you can use them as an ongoing guideline.

2. Stick to an investment schedule. Disposable income is hard to come by. When possible, try to invest at regular intervals to keep building up your portfolio. Generally, it is easier to make small investments over time as opposed to large sums. One idea: Pay yourself before you pay others by taking a set percentage or dollar amount from your paycheck each month. Of course, if you should suddenly come into a windfall, such as an inheritance, it makes sense to invest this amount wisely.

3. Give yourself a raise. Even if you are not in line for a salary increase at work, you may be able to bump up your take-home pay by claiming extra withholding allowances. Try to bring your tax return liability to zero. If you are getting a big refund each year, you are effectively giving the government free use of your money. Consult a professional tax advisor to see how you can best approach the situation.

4. Use common sense.  Making sound investment choices requires a careful balance. On one hand, you want to receive a reasonable return, but you should not expose yourself to inordinate risk.  Do your “due diligence” before you invest.  Also, remember that past performance is a factor to consider, but it is not a guarantee of future success.

5. Seek professional assistance.  These tasks may be daunting, but you do not have to do it all alone. If you decide to rely on a financial services firm, make sure you choose one that will help you concentrate on your investment goals. The firm should work with you to protect your interests.  At the same time, you can remain in complete control of your finances.

Finally, be aware that there are some potential downsides to a plan of long-term investing, especially if you limit your strategies to just a handful of investments.  But the pros far outweigh the cons. These five steps can help put you on the right path.

This newsletter/advertisement is produced for our clients, friends and associates through an arrangement with WPI Communications, Inc. for the representatives’ use. Although the editorial content is professionally researched, written and edited, neither our firm nor any of its agents, representatives or associates make any representations regarding the accuracy of the content or its applicability to your situation. The information in this communication is not intended as tax or legal advice. In accordance with IRS Circular 230, the information provided herein may not be relied on for purposes of avoiding any federal tax penalties. Any tax advice contained in the body of this material was not intended or written to be used, and cannot be used, by the recipient for the purpose of 1) avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions, or 2) promoting, marketing or recommending to another party any transaction or matter addressed herein. You are encouraged to seek tax or legal advice from an independent advisor.


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