If your fund isn't performing the way
you think it should be, that could be a clue that the
fund's stock mix has changed.
"If a value fund
had suddenly taken off last year when most didn't, that
may be because the fund switched over to more growth-oriented
stock," says Scott. "You need to decide if
the manager was right in making that decision."
Got a plan?
Like anything else, it helps if you have a plan. How
much money are you putting in and into what asset classes?
What rate of return are you expecting from each and
are you getting it?
And once a year, go through and make sure
your investment strategy matches your personal risk
tolerance, says Scott, "especially given the bear
market of recent years."
"It's a good test of whether you're
overly committed to a particular area -- the stock market
in particular," she says. But you don't have to
obsess, either. Just "once a year," says Scott,
"at whatever time is easiest for you."
Gates recommends regularly following the
performance of your investments, then sitting down annually
to look at how those investments fit your investment
strategy and risk tolerance.
And it never hurts to talk to a professional.
"The shift away from defined-benefit
pension plans has shifted an incredible burden to employees,"
says Gates. "It's an awesome responsibility, and
most people don't have the expertise to do that."
What you want in an adviser: someone who
can give you neutral advice and won't benefit financially
from recommending certain products or assets.
Shop for someone "who's compensated
in a way that doesn't lead to a conflict of interest
between you and the advisers," says Scott. "That
would be basically a fee-based adviser."
Also look for credentials, such as certified
financial planner, certified public accountant or registered
In some cases, a little extra help might
be closer than you think. Some employers actually offer
financial planning services. But in general only half
of the employees take advantage of the opportunity,
according to John Hancock's 2004 survey.
"Financial planning gives them a
target or reference point on how to invest and how to
hang in during difficult time periods," says Gates.
"People should periodically review their asset
mix and determine if they're at their target. If they'd
gone through financial planning they'd be able to come
up with that."
Many financial institutions also have
IRA calculators on their Web site that can help you
figure out how much money you'll need for retirement.
You can also tap sites that, for a fee, will help you
decide which funds suit your financial goals and risk
tolerance. Just like hiring a financial professional,
though, it pays to know who's behind the curtain so
that you can consider that along with the advice you
As the idea of individual retirement savings
has taken off the last few years, the number of Web
sites with helpful information for investors has grown,
too, says Gates. "It's just a question of getting
people to understand the information."