      |
|
September 5, 2010 |     |
|
|
|
|
Newsletters
Time For Your Financial Check-UpMany people get their annual physical at the beginning of the year. The start of the New Year is also a perfect time to get your finances in order. Once a year, it is wise to review your financial picture and make any changes or adjustments based on your current situation. An annual financial check-up helps you to see whether or not you are on the right path toward your financial goals. The following discusses a list of items to help you carry out your personal review. Asset Allocation Your asset allocation is the mix of stock and fixed income investments in your portfolio. How you allocate your assets is the most important factor in determining investment performance. There have been several studies of large pension plans that have found asset allocation accounts for 91.5% of a portfolios performance, far outweighing market timing and security selection. The process of asset allocation takes into consideration your tolerance for risk, your time horizon and your retirement goals. If you have a longer time horizon, you may be able to tolerate more investment risk and therefore includes a heavier allocation to stock investments. If you are nearing or in retirement, you may be more comfortable with lower investment risk and include a higher allocation to Stable Value. Due to longer life expectancies and early retirement packages, most people need to plan for 25 to 35 years in retirement. In order to produce enough growth to keep up with inflation throughout retirement, it is important to include stock investments in your account. Regardless of your objectives, we feel it is a good idea to diversify your portfolio to balance risk and return. Scarborough has created five model investment mixes ranging from Conservative to Aggressive Growth. If you have not already done so, we encourage you to look at these models as they were designed to provide the highest long-term return at given levels of risk. To help you measure your investment risk tolerance, we offer our Investor Profile on our website (www.scarboroughalliance.com). You may access this by going to Library and Forms and selecting Worksheet E - Measuring Your Risk Tolerance . Or, feel free to call us and we will discuss whether your current asset allocation is appropriate for you. Once your proper asset allocation has been determined, it is important to review annually whether there have been any changes in your life that would suggest a change in your allocation. These changes may include changes in employment status, health issues, inheritance, etc. Rebalancing After selecting your proper asset allocation, as time goes by, it is a good idea to rebalance your account in order to keep your allocations consistent with your risk tolerance. Over time, the percentages in each of your funds fluctuate away from the starting value. Those investments with the highest rates of return over the period have gained more in earnings and therefore have become a larger percentage of the account. Investments with lower rates of return then comprise a lower percentage of the total account. Rebalancing is the process of returning your account balance back to your original investment percentages. If you dont rebalance your account, you could end up with an investment mix that isnt right for you and your goals. The Plan offers an Automatic Rebalancing feature free of charge to those participants who would like their accounts rebalanced to their models target percentages on an annual, semi-annual, or quarterly basis. Contact us for details. Monitoring the Funds Our philosophy is to provide participants with low cost, top-performing investments. After selecting the funds for the Plan, our ongoing responsibility is to monitor their performance over time to measure how a fund is doing relative to its benchmark index and peer group. Each of your funds is reviewed on a quarterly basis. Perhaps you have accounts elsewhere which contain investments that are not performing up to your expectations, are not being monitored regularly, or charge high annual expenses/sales charges. If so, feel free to discuss these accounts with us. Well do an evaluation of what you currently have and if appropriate, offer recommendations on how we can help. Withdrawals If you are retired and taking withdrawals from your account, it is important to look at the long-term impact on your account. How long will your account last at your current withdrawal rate? We can make you aware if potential problems exist and make suggestions on how to improve the situation. Contributions to Retirement Savings If you are still working, it is important to review how much you are saving toward your retirement goals. Consider whether you can boost your contributions this year. Even small increases add up over time. And, because of the tax savings created by saving on a pre-tax basis, your take home pay may not be reduced as much as you think. Another important thing to consider is company matching. Are you contributing enough to receive the full matching offered by your employer? If not, you are losing out on an important benefit. If you are taking full advantage of your 401(k) plan and company match and would like to save even more, talk to us about other savings vehicles such as Roth IRAs. To see how much your contributions and match may grow, visit the 401(k) Savings Calculator located under Tools & Calculators on our website. Beneficiaries If a change in your life has occurred (for example, change in marital status, birth of a child, death of a loved one), make sure your beneficiary designation is up to date. You want to be sure that your wishes are carried out if something should happen to you. Fund Manager of the Year We are pleased to announce that Harbor International's fund manager, Hakan Castegren, was awarded International Stock Fund Manager of the Year by Morningstar. This is the second time Mr. Castegren has received this award as he won it previously in 1996. We continue to be pleased with the performance of the Harbor fund as it has consistently delivered great returns for Plan investors. This year, the award was not just given to Mr. Castegren but to the entire team that supports him. Under the watch of these talented investors, the fund experienced tremendous gains in 2007. The funds outstanding long-term returns have been even more impressive and it was recently noted that its 15-year return is the best of any foreign large-value fund. (Published: 2/18/2008) Back to Index |
|
© 2010 Scarborough Alliance Corporation. All rights reserved. Printing Instructions |