Managing your IRA for maximum gain
By Laura Bruce • Bankrate.com

Have you checked your IRA recently? Americans have stashed trillions of dollars in IRA and 401(k) retirement plans but too many of us are treating those accounts as though they're bottles of fine wine -- leave them in the dark and forget about them.

The key to getting the biggest bang for your buck is asset allocation. The right mix of stocks, funds, bonds, cash and other investments should balance risk and return in a portfolio.

Saving without a plan
But a study by the American Savings Education Council shows that nearly 60 percent of plan participants don't have an asset allocation strategy.

It gets worse. Wayne Gates, director of the Investment and Pension Unit at John Hancock Financial Services in Boston, says even in cases where employers offer financial planning services, less than half of the employees take advantage of them.

"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."

In addition to taking advantage of any help your employer provides, Gates points out that many financial institutions, including John Hancock, have IRA calculators on their Web sites that can be helpful in figuring how much money you'll need in retirement. There also are sites such as financialengines and mpower that, for a fee, will help you decide which funds suit your financial goals and risk tolerance.

Too often, people who have mutual funds in their portfolio think that because a pro is being paid handsomely to manage the fund there's no need for them to check on it. Fund managers routinely trade stocks within a fund and that could be costing you money -- or putting your portfolio in a higher risk category than makes you comfortable.

Check your money often
Maria Scott of the Chicago-based American Association of Individual Investors says you should review the progress of your mutual funds every quarter.

"Make sure the manager is managing the fund as you expected. If it diverges from your original goal, find out why the manager has invested in different stocks. One clue to the fact it's changed is comparing the performance of a mutual fund to an index that covers the category you think best represents what that fund should be doing, such as a small cap index."

Another clue that a fund's stock mix has changed is if the sector your fund is in did (or didn't) do well, but your particular fund went in the opposite direction.

"If a value fund had suddenly taken off last year when most didn't," says Scott, "that may be because the fund switched over to more growth-oriented stock. You need to decide if the manager was right in making that decision."

Something else that deserves consideration is to speak to a professional. You don't necessarily need to hire them to manage your account, but they can get you started in the right direction.

"The shift away from defined benefit pension plans has shifted an incredible burden to employees," says Hancock's Wayne Gates. "It's an awesome responsibility and most people don't have the expertise to do that."

When looking for a financial planner, check for credentials such as certified financial planner, chartered financial analyst or a member of the Financial Planning Association. Many certified public accountants also provide investment advice.