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Abney Associates Ameriprise Financial Advisor

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Abney Associates Ameriprise Financial Advisor

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Auswirkungen von Ihrer Kreditkarte durch Studentendarlehen

Wenn Sie innerhalb der letzten paar Jahre College beendet haben, sind Wahrscheinlichkeiten Sie aus Ihrem Studentendarlehen zahlen. Was passiert mit Ihrem Studentendarlehen, jetzt, wo sie Rückzahlung Status eingegeben haben wird eine erheblich--positiv oder negativ--auf Ihre Kredit-Geschichte und Kredit-Score auswirken.

ES IST ZEIT, PAYBACK

Wenn Sie die Schule verlassen, genossen Sie eine Nachfrist von sechs bis neun Monate, bevor Sie beginnen, Ihre Studentendarlehen zurückzahlen musste. Aber sie waren da die ganze Zeit schlafen wie ein 800-Pfund-Gorilla in der Ecke des Raumes. Sobald die Frist vorbei war, wachte die Gorilla. Wie ist er jetzt auf die Ihre Fähigkeit, andere Kredite zu erhalten?

Eine Möglichkeit herauszufinden, ist um eine Kopie Ihrer Kredit-Bericht ziehen. Gibt es drei große Berichterstattung Agenturen oder Auskunfteien--Experian, Equifax, Kredit und Trans Union-- und Sie sollten eine Kopie Ihrer Kredit-Bericht von jedem erhalten. Halten Sie im Verstand, obwohl, die während Institutionen machen Studiendarlehen erforderlich sind, um das Datum der Auszahlung, Bericht Saldo fällig und aktuellen Status Ihrer Kredite an einer Kreditauskunftei, sie sind nicht derzeit erforderlich, um die Informationen zu allen drei, obwohl viele tun.

Wenn Sie Ihr Studentendarlehen pünktlich zurückzuzahlen sind, dann die Gorilla verhält sich schön und tatsächlich hilft Ihnen eine gute Gutschriftgeschichte zu etablieren. Aber wenn Sie ernst delinquent oder in Verzug auf Ihre Kredite, die Gorilla wird zu King Kong, terrorisieren die Nachbarschaft und ernsthaft untergraben Ihre Bemühungen, weitere Kredite zu erhalten.

WAS ERGEBNIS IHRER KREDITKARTE?

Ihrer Kredit-Bericht enthält Informationen zu einem Kredit haben Sie, einschließlich Kreditkarten, Autokredite und Studentendarlehen. Der Credit Bureau (oder jeder potenzielle Gläubiger) kann diese Informationen verwenden, um einen Kredit-Score, zu erzeugen, die statistisch Informationen über Sie an die Kredit-Leistung einer base Probe der Verbraucher mit ähnlichen Profilen vergleicht. Je höher Ihre Kredit-Score, desto wahrscheinlicher sind Sie eine gute Kredit-Risiko und desto besser Ihre Chancen auf Kredit zu einem günstigen Zinssatz.

Viele verschiedene Faktoren werden verwendet, um zu bestimmen, Ihre Kredit-Score. Einige dieser Faktoren sind mehr Gewicht als andere. Erhebliches Gewicht erhält Faktoren beschreiben:

-Ihr Zahlungsverhalten, z. B., ob Sie Ihre Pflichten bezahlt haben, auf Zeit und wie lange jede Ausfallquoten gedauert haben

-Ihre ausstehenden Schulden, einschließlich der Beträge, die Sie auf Ihre Konten, die verschiedenen Arten von Konten Schulden, die Sie haben (z. B. Kreditkarten, Ratenkrediten), und wie nah Ihr Guthaben an die Konto-Grenzen sind

-Ihrer Kredit-Geschichte, darunter, wie lange du hattest Kredit, wie lange bestimmte Konten offen waren, und wie lange es ist schon seit Sie jedes Konto verwendet haben

-Neuer Kredit, darunter, wie viele Anfragen oder Anträge auf Kredite, die Sie vorgenommen haben, und wie Sie sie gemacht haben

STUDIENDARLEHEN UND IHRE KREDIT-SCORE

Stellen Sie immer Ihre Studenten Darlehen Zahlungen pünktlich. Andernfalls wird Ihre Kredit-Score negativ beeinflusst werden. Um Ihre Kredit-Score zu verbessern, ist es auch wichtig, um sicherzustellen, dass jede positive Rückzahlung-Geschichte von alle drei Kreditauskunfteien, ordnungsgemäß gemeldet wird, vor allem, wenn Ihre Kredit-Geschichte mit geringer Dichte ist. Wenn Sie feststellen, dass Ihr Studentendarlehen korrekt auf allen drei großen Auskunfteien gemeldet sind nicht, Fragen Sie Ihre kreditgebende Stelle zu tun.

Aber selbst wenn es da ist, für alle zu sehen, eine große Studenten Darlehen Schulden kann einen Faktor auswirken potenzielle Gläubiger genau hinterfragen: Ihre Schulden-to-Income-Ratio. Große Student Kredit Schulden negativ vor allem Ihre Wahrscheinlichkeiten des Erhaltens neuen Kredit, wenn Sie in einem schlecht bezahlten Job, und potenzieller Gläubiger fühlt sich Ihr Budget wird gedehnt, zu dünn, um Platz für die Zahlungen vornehmen neuer Kredit benötigen.

Darüber hinaus Wenn deine wichtigsten Balancen noch nicht viel geändert (und sie nicht in den Anfangsjahren von Darlehen mit langer Laufzeit) oder wenn sie größer sind (weil Sie eine Nachsicht auf Ihrem Studentendarlehen getroffen haben und die anfallende Zinsen ist Ihre Restschuld hinzufügen), es kann zu einem potenziellen Kreditgeber aussehen, wie du nicht viel Fortschritt machst an, um die Staatsverschuldung bereits bezahlt. Lesen Sie weiter...

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An Abney Associates Ameriprise Financial Advisor on Qualified and
Nonqualified Annuities

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An Abney Associates Ameriprise Financial Advisor on Qualified and
Nonqualified Annuities

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You may have heard that IRAs and employer-sponsored plans (e.g., 401(k)s) are the best ways to invest for retirement. That's true for many people, but what if you've maxed out your contributions to those accounts and want to save more? An annuity may be a good investment to look into.

GET THE LAY OF THE LAND

An annuity is a tax-deferred investment contract. The details on how it works vary, but here's the general idea. You invest your money (either a lump sum or a series of contributions) with a life insurance company that sells annuities (the annuity issuer). The period when you are funding the annuity is known as the accumulation phase. In exchange for your investment, the annuity issuer promises to make payments to you or a named beneficiary at some point in the future. The period when you are receiving payments from the annuity is known as the distribution phase. Chances are, you'll start receiving payments after you retire.

UNDERSTAND YOUR PAYOUT OPTIONS

Understanding your annuity payout options is very important. Keep in mind that payments are based on the claims-paying ability of the issuer. You want to be sure that the payments you receive will meet your income needs during retirement. Here are some of the most common payout options:

You surrender the annuity and receive a lump-sum payment of all of the money you have accumulated.

You receive payments from the annuity over a specific number of years, typically between 5 and 20. If you die before this "period certain" is up, your beneficiary will receive the remaining payments.

You receive payments from the annuity for your entire lifetime. You can't outlive the payments (no matter how long you live), but there will typically be no survivor payments after you die.

You combine a lifetime annuity with a period certain annuity. This means that you receive payments for the longer of your lifetime or the time period chosen. Again, if you die before the period certain is up, your beneficiary will receive the remaining payments.

You elect a joint and survivor annuity so that payments last for the combined life of you and another person, usually your spouse. When one of you dies, the survivor receives payments for the rest of his or her life.

When you surrender the annuity for a lump sum, your tax bill on the investment earnings will be due all in one year. The other options on this list provide you with a guaranteed stream of income (subject to the claims-paying ability of the issuer). They're known as annuitization options because you've elected to spread payments over a period of years. Part of each payment is a return of your principal investment. The other part is taxable investment earnings. You typically receive payments at regular intervals throughout the year (usually monthly, but sometimes quarterly or yearly). The amount of each payment depends on the amount of your principal investment, the particular type of annuity, the length of the payout period, your age if payments for lifetime payments, and other factors.

CONSIDER THE PROS AND CONS

An annuity can often be a great addition to your retirement portfolio. Here are some reasons to consider investing in an annuity:

Your investment earnings are tax deferred as long as they remain in the annuity. You don't pay income tax on those earnings until they are paid out to you.

An annuity may be free from the claims of your creditors in some states.

If you die with an annuity, the annuity's death benefit will pass to your beneficiary without having to go through probate.

Your annuity can be a reliable source of retirement income, and you have some freedom to decide how you'll receive that income.

You don't have to meet income tests or other criteria to invest in an annuity.

You're not subject to an annual contribution limit, unlike IRAs and employer-sponsored plans. You can contribute as much or as little as you like in any given year.

You're not required to start taking distributions from an annuity at age 70½ (the required minimum distribution age for IRAs and employer-sponsored plans). You can typically postpone payments until you need the income.

But annuities aren't for everyone. Here are some potential drawbacks:

Contributions to nonqualified annuities are made with after-tax dollars and are not tax deductible.

Once you've elected to annuitize payments, you usually can't change them, but there are some exceptions.

You can take your money from an annuity before you start receiving payments, but your annuity issuer may impose a surrender charge if you withdraw your money within a certain number of years (e.g., seven) after your original investment.

You may have to pay other costs when you invest in an annuity (e.g., annual fees, investment management fees, insurance expenses).

You may be subject to a 10 percent federal penalty tax (in addition to any regular income tax) if you withdraw your money from an annuity before age 59½, unless you meet one of the exceptions to this rule.

Investment gains are taxed as ordinary income tax rates, not at the lower capital gains rate.

CHOOSE THE RIGHT TYPE OF ANNUITY

If you think that an annuity is right for you, your next step is to decide which type of annuity. Overwhelmed by all of theannuity products on the market today? Don't be. In fact, most annuities fit into a small handful of categories. Your choices basically revolve around two key questions.

First, how soon would you like annuity payments to begin? That probably depends on how close you are to retiring. If you're near retirement or already retired, an immediate annuity may be your best bet. This type of annuity starts making payments to you shortly after you buy the annuity, typically within a year or less. But what if you're younger, and retirement is still a long-term goal? Then you're probably better off with a deferred annuity. As the name suggests, this type of annuity lets you postpone payments until a later time, even if that's many years down the road.

Second, how would you like your money invested? With a fixed annuity, the annuity issuer determines an interest rate to credit to your investment account. An immediate fixed annuity guarantees a particular rate, and your payment amount never varies. A deferred fixed annuity guarantees your rate for a certain number of years; your rate then fluctuates from year to year as market interest rates change. A variable annuity, whether immediate or deferred, gives you more control and the chance to earn a better rate of return (although with a greater potential for gain comes a greater potential for loss). You select your own investments from the subaccounts that the annuity issuer offers. Your payment amount will vary based on how your investments perform.

Note: Variable annuities are sold by prospectus. You should consider the investment objectives, risk, charges and expenses carefully before investing. The prospectus, which contains this and other information about the variable annuity, can be obtained from the insurance company issuing the variable annuity or from your financial professional. You should read the prospectus carefully before you invest.

SHOP AROUND

It pays to shop around for the right annuity. In fact, doing a little homework could save you hundreds of dollars a year or more. Why? Rates of return and costs can vary widely between different annuities. You'll also want to shop around for a reputable, financially sound annuity issuer. There are firms that make a business of rating insurance companies based on their financial strength, investment performance, and other factors. Consider checking out these ratings.

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An Abney Associates Ameriprise Financial
Advisor on Understanding Long-Term Care Insurance

 

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An Abney Associates Ameriprise Financial
Advisor on Understanding Long-Term Care Insurance

 

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IT'S A FACT: People today are living longer. Although that's good news, the odds of requiring some sort of long-term care increase as you get older. And as the costs of home care, nursing homes, and assisted living escalate, you probably wonder how you're ever going to be able to afford long-term care. One solution that is gaining in popularity is long-term care insurance (LTCI).

WHAT IS LONG-TERM CARE?

Most people associate long-term care with the elderly. But it applies to the ongoing care of individuals of all ages who can no longer independently perform basic activities of daily living (ADLs)--such as bathing, dressing, or eating--due to an illness, injury, or cognitive disorder. This care can be provided in a number of settings, including private homes, assisted-living facilities, adult day-care centers, hospices, and nursing homes.

WHY YOU NEED LONG-TERM CARE INSURANCE (LTCI)

Even though you may never need long-term care, you'll want to be prepared in case you ever do, because long-term care is often very expensive. Although Medicaid does cover some of the costs of long-term care, it has strict financial eligibility requirements--you would have to exhaust a large portion of your life savings to become eligible for it. And since HMOs, Medicare, and Medigap don't pay for most long-term care expenses, you're going to need to find alternative ways to pay for long-term care. One option you have is to purchase an LTCI policy.

However, LTCI is not for everyone. Whether or not you should buy it depends on a number of factors, such as your age and financial circumstances. Consider purchasing an LTCI policy if some or all of the following apply:

You are between the ages of 40 and 84

You have significant assets that you would like to protect

You can afford to pay the premiums now and in the future

You are in good health and are insurable

HOW DOES LTCI WORK?

Typically, an LTCI policy works like this: You pay a premium, and when benefits are triggered, the policy pays a selected dollar amount per day (for a set period of time) for the type of long-term care outlined in the policy.

Most policies provide that certain physical and/or mental impairments trigger benefits. The most common method for determining when benefits are payable is based on your inability to perform certain activities of daily living (ADLs), such as eating, bathing, dressing, continence, toileting (moving on and off the toilet), and transferring (moving in and out of bed). Typically, benefits are payable when you're unable to perform a certain number of ADLs (e.g., two or three).

Some policies, however, will begin paying benefits only if your doctor certifies that the care is medically necessary. Others will also offer benefits for cognitive or mental incapacity, demonstrated by your inability to pass certain tests.

COMPARING LTCI POLICIES

Before you buy LTCI, it's important to shop around and compare several policies. Read the Outline of Coverage portion of each policy carefully, and make sure you understand all of the benefits, exclusions, and provisions. Once you find a policy you like, be sure to check insurance company ratings from services such as A. M. Best, Moody's, and Standard & Poor's to make sure that the company is financially stable.

When comparing policies, you'll want to pay close attention to these common features and provisions:

Elimination period: The period of time before the insurance policy will begin paying benefits (typical options range from 20 to 100 days). Also known as the waiting period.

Duration of benefits: The limitations placed on the benefits you can receive (e.g., a dollar amount such as $150,000 or a time limit such as two years).

Daily benefit: The amount of coverage you select as your daily benefit (typical options range from $50 to $350).

Optional inflation rider: Protection against inflation.

Range of care: Coverage for different levels of care (skilled, intermediate, and/or custodial) in care settings specified in policy (e.g., nursing home, assisted living facility, at home).

Pre-existing conditions: The waiting period (e.g., six months) imposed before coverage will go into effect regarding treatment for pre-existing conditions.

Other exclusions: Whether or not certain conditions are covered (e.g., Alzheimer's or Parkinson's disease).

Premium increases: Whether or not your premiums will increase during the policy period.

Guaranteed renewability: The opportunity for you to renew the policy and maintain your coverage despite any changes in your health.

Grace period for late payment: The period during which the policy will remain in effect if you are late paying the premium.

Return of premium: Return of premium or nonforfeiture benefits if you cancel your policy after paying premiums for a number of years.

Prior hospitalization: Whether or not a hospital stay is required before you can qualify for LTCI benefits.

When comparing LTCI policies, you may wish to seek assistance. Consult a financial professional, attorney, or accountant for more information.

WHAT'S IT GOING TO COST?

There's no doubt about it: LTCI is often expensive. Still, the cost of LTCI depends on many factors, including the type of policy that you purchase (e.g., size of benefit, length of benefit period, care options, optional riders). Premium cost is also based in large part on your age at the time you purchase the policy. The younger you are when you purchase a policy, the lower your premiums will be.

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Abney Associates Team A financial
advisory practice of Ameriprise Financial Services, Inc.: Closing a retirement
income gap

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Abney Associates Team A financial
advisory practice of Ameriprise Financial Services, Inc.: Closing a retirement
income gap

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Are you looking for ways to reach your financial goals in today's volatile market? Whether you’re saving for retirement, college for your kids or other needs, you may be unsure about what to do next or whether you can do anything at all. That's where we can help. We'll take the time to listen to you and understand your goals and dreams. We'll help you build a plan to get back on track toward reaching them. Working together, Ameriprise Financial Abney Associates Team will work to find investing opportunities in today’s uncertain market that are aligned with your financial goals. Together, we can bring your dreams more within reach.

When you determine how much income you'll need in retirement, you may base your projection on the type of lifestyle you plan to have and when you want to retire. However, as you grow closer to retirement, you may discover that your income won't be enough to meet your needs. If you find yourself in this situation, you'll need to adopt a plan to bridge this projected income gap.

DELAY RETIREMENT: 65 IS JUST A NUMBER

One way of dealing with a projected income shortfall is to stay in the workforce longer than you had planned. This will allow you to continue supporting yourself with a salary rather than dipping into your retirement savings. Depending on your income, this could also increase your Social Security retirement benefit. You'll also be able to delay taking your Social Security benefit or distributions from retirement accounts.

At normal retirement age (which varies, depending on the year you were born), you will receive your full Social Security retirement benefit. You can elect to receive your Social Security retirement benefit as early as age 62, but if you begin receiving your benefit before your normal retirement age, your benefit will be reduced. Conversely, if you delay retirement, you can increase your Social Security benefit.

Remember, too, that income from a job may affect the amount of Social Security retirement benefit you receive if you are under normal retirement age. Your benefit will be reduced by $1 for every $2 you earn over a certain earnings limit ($15,120 in 2013, $14,640 in 2012). But once you reach normal retirement age, you can earn as much as you want without affecting your Social Security retirement benefit.

Another advantage of delaying retirement is that you can continue to build tax-deferred funds in your IRA or employer-sponsored retirement plan. Keep in mind, though, that you may be required to start taking minimum distributions from your qualified retirement plan or traditional IRA once you reach age 70½, if you want to avoid harsh penalties.

And if you're covered by a pension plan at work, you could also consider retiring and then seeking employment elsewhere. This way you can receive a salary and your pension benefit at the same time. Some employers, to avoid losing talented employees this way, are beginning to offer "phased retirement" programs that allow you to receive all or part of your pension benefit while you're still working. Make sure you understand your pension plan options.

SPEND LESS, SAVE MORE

You may be able to deal with an income shortfall by adjusting your spending habits. If you're still years away from retirement, you may be able to get by with a few minor changes. However, if retirement is just around the corner, you may need to drastically change your spending and saving habits. Saving even a little money can really add up if you do it consistently and earn a reasonable rate of return. Make permanent changes to your spending habits and you'll find that your savings will last even longer. Start by preparing a budget to see where your money is going. Here are some suggested ways to stretch your retirement dollars:

-  Refinance your home mortgage if interest rates have dropped since you took the loan.

-  Reduce your housing expenses by moving to a less expensive home or apartment.

-  Sell one of your cars if you have two. When your remaining car needs to be replaced, consider buying a used one.

-  Access the equity in your home. Use the proceeds from a second mortgage or home equity line of credit to pay off higher-interest-rate debts.

-  Transfer credit card balances from higher-interest cards to a low- or no-interest card, and then cancel the old accounts.

-  Ask about insurance discounts and review your insurance needs (e.g., your need for life insurance may have lessened).

-  Reduce discretionary expenses such as lunches and dinners out.

Earmark the money you save for retirement and invest it immediately. If you can take advantage of an IRA, 401(k), or other tax-deferred retirement plan, you should do so. Funds invested in a tax-deferred account will generally grow more rapidly than funds invested in a non-tax-deferred account.

REALLOCATE YOUR ASSETS: CONSIDER INVESTING MORE AGGRESSIVELY

Some people make the mistake of investing too conservatively to achieve their retirement goals. That's not surprising, because as you take on more risk, your potential for loss grows as well. But greater risk also generally entails greater reward. And with life expectancies rising and people retiring earlier, retirement funds need to last a long time.

That's why if you are facing a projected income shortfall, you should consider shifting some of your assets to investments that have the potential to substantially outpace inflation. The amount of investment dollars you should keep in growth-oriented investments depends on your time horizon (how long you have to save) and your tolerance for risk. In general, the longer you have until retirement, the more aggressive you can afford to be. Still, if you are at or near retirement, you may want to keep some of your funds in growth-oriented investments, even if you decide to keep the bulk of your funds in more conservative, fixed-income investments. Get advice from a financial professional if you need help deciding how your assets should be allocated.

And remember, no matter how you decide to allocate your money, rebalance your portfolio now and again. Your needs will change over time, and so should your investment strategy.

ACCEPT REALITY: LOWER YOUR STANDARD OF LIVING

If your projected income shortfall is severe enough or if you're already close to retirement, you may realize that no matter what measures you take, you will not be able to afford the retirement lifestyle you've dreamed of. In other words, you will have to lower your expectations and accept a lower standard of living.

Fortunately, this may be easier to do than when you were younger. Although some expenses, like health care, generally increase in retirement, other expenses, like housing costs and automobile expenses, tend to decrease. And it's likely that your days of paying college bills and growing-family expenses are over.

Once you are within a few years of retirement, you can prepare a realistic budget that will help you manage your money in retirement. Think long term: Retirees frequently get into budget trouble in the early years of retirement, when they are adjusting to their new lifestyles. Remember that when you are retired, every day is Saturday, so it's easy to start overspending.

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Abney Associates Team A financial
advisory practice of Ameriprise Financial Services, Inc.: Six keys to
successful investing

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Abney Associates Team A financial
advisory practice of Ameriprise Financial Services, Inc.: Six keys to
successful investing

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A successful investor maximizes gain and minimizes loss. Though there can be no guarantee that any investment strategy will be successful and all investing involves risk, including the possible loss of principal, here are six basic principles that may help you invest more successfully.

LONG-TERM COMPOUNDING CAN HELP YOUR NEST EGG GROW

It's the "rolling snowball" effect. Put simply, compounding pays you earnings on your reinvested earnings. The longer you leave your money at work for you, the more exciting the numbers get. For example, imagine an investment of $10,000 at an annual rate of return of 8 percent. In 20 years, assuming no withdrawals, your $10,000 investment would grow to $46,610. In 25 years, it would grow to $68,485, a 47 percent gain over the 20-year figure. After 30 years, your account would total $100,627. (Of course, this is a hypothetical example that does not reflect the performance of any specific investment.)

This simple example also assumes that no taxes are paid along the way, so all money stays invested. That would be the case in a tax-deferred individual retirement account or qualified retirement plan. The compounded earnings of deferred tax dollars are the main reason experts recommend fully funding all tax-advantaged retirement accounts and plans available to you. Abney Associates Team A financial advisory practice of Ameriprise Financial Services, Inc.

While you should review your portfolio on a regular basis, the point is that money left alone in an investment offers the potential of a significant return over time. With time on your side, you don't have to go for investment "home runs" in order to be successful.

ENDURE SHORT-TERM PAIN FOR LONG-TERM GAIN

Riding out market volatility sounds simple, doesn't it? But what if you've invested $10,000 in the stock market and the price of the stock drops like a stone one day? On paper, you've lost a bundle, offsetting the value of compounding you're trying to achieve. It's tough to stand pat.

There's no denying it--the financial marketplace can be volatile. Ameriprise Financial Abney Associates Team, it's important to remember two things. First, the longer you stay with a diversified portfolio of investments, the more likely you are to reduce your risk and improve your opportunities for gain. Though past performance doesn't guarantee future results, the long-term direction of the stock market has historically been up. Take your time horizon into account when establishing your investment game plan. For assets you'll use soon, you may not have the time to wait out the market and should consider investments designed to protect your principal. Conversely, think long-term for goals that are many years away.

Second, during any given period of market or economic turmoil, some asset categories and some individual investments historically have been less volatile than others. Bond price swings, for example, have generally been less dramatic than stock prices. Though diversification alone cannot guarantee a profit or ensure against the possibility of loss, you can minimize your risk somewhat by diversifying your holdings among various classes of assets, as well as different types of assets within each class.

SPREAD YOUR WEALTH THROUGH ASSET ALLOCATION

Asset allocation is the process by which you spread your dollars over several categories of investments, usually referred to as asset classes. These classes include stocks, bonds, cash (and cash alternatives), real estate, precious metals, collectibles, and in some cases, insurance products. You'll also see the term "asset classes" used to refer to subcategories, such as aggressive growth stocks, long-term growth stocks, international stocks, government bonds (U.S., state, and local), high-quality corporate bonds, low-quality corporate bonds, and tax-free municipal bonds. A basic asset allocation would likely include at least stocks, bonds (or mutual funds of stocks and bonds) Financial Advisory Abney Associates and cash or cash alternatives.

There are two main reasons why asset allocation is important. First, the mix of asset classes you own is a large factor--some say the biggest factor by far--in determining your overall investment portfolio performance. In other words, the basic decision about how to divide your money between stocks, bonds, and cash is probably more important than your subsequent decisions over exactly which companies to invest in, for example.

Second, by dividing your investment dollars among asset classes that do not respond to the same market forces in the same way at the same time, you can help minimize the effects of market volatility while maximizing your chances of return in the long term. Ideally, if your investments in one class are performing poorly, assets in another class may be doing better. Any gains in the latter can help offset the losses in the former and help minimize their overall impact on your portfolio.

CONSIDER LIQUIDITY IN YOUR INVESTMENT CHOICES

Liquidity refers to how quickly you can convert an investment into cash without loss of principal (your initial investment). Generally speaking, the sooner you'll need your money, the wiser it is to keep it in investments with comparatively less volatile price movements. You want to avoid a situation, for example, where you need to write a tuition check next Tuesday, but the money is tied up in an investment whose price is currently down.

Therefore, your liquidity needs should affect your investment choices. If you'll need the money within the next one to three years, you may want to consider certificates of deposit or a savings account, which are insured by the FDIC, or short-term bonds or a money market account, which are neither insured or guaranteed by the FDIC or any other governmental agency. Your rate of return will likely be lower than that possible with more volatile investments such as stocks, but you'll breathe easier knowing that the principal you invested is relatively safe and quickly available, without concern over market conditions on a given day.

Note: If you're considering a mutual fund, consider its investment objectives, risks, charges, and expenses, all of which are outlined in the prospectus, available from the fund. Consider the information carefully before investing.

DOLLAR COST AVERAGING: INVESTING CONSISTENTLY AND OFTEN

Dollar cost averaging is a method of accumulating shares of stock or a mutual fund by purchasing a fixed dollar amount of these securities at regularly scheduled intervals over an extended time. When the price is high, your fixed-dollar investment buys less; when prices are low, the same dollar investment will buy more shares. A regular, fixed-dollar investment should result in a lower average price per share than you would get buying a fixed number of shares at each investment interval.

Remember that, just as with any investment strategy, dollar cost averaging can't guarantee you a profit or protect you against a loss if the market is declining. To maximize the potential effects of dollar cost averaging, you should also assess your ability to keep investing even when the market is down.

An alternative to dollar cost averaging would be trying to "time the market," in an effort to predict how the price of the shares will fluctuate in the months ahead so you can make your full investment at the absolute lowest point. However, market timing is generally unprofitable guesswork. The discipline of regular investing is a much more manageable strategy, and it has the added benefit of automating the process.

BUY AND HOLD, DON'T BUY AND FORGET

Unless you plan to rely on luck, your portfolio's long-term success will depend on periodically reviewing it. Maybe your uncle's hot stock tip has frozen over. Maybe economic conditions have changed the prospects for a particular investment, or an entire asset class.

Even if nothing bad at all happens, your various investments will likely appreciate at different rates, which will alter your asset allocation without any action on your part. For example, if you initially decided on an 80 percent to 20 percent mix of stocks to bonds, you might find that after several years the total value of your portfolio has become divided 88 percent to 12 percent (conversely, if stocks haven't done well, you might have a 70-30 ratio of stocks to bonds in this hypothetical example). You need to review your portfolio periodically to see if you need to return to your original allocation. To rebalance your portfolio, you would buy more of the asset class that's lower than desired, possibly using some of the proceeds of the asset class that is now larger than you intended.

Another reason for periodic portfolio review: your circumstances change over time, and your asset allocation will need to reflect those changes. For example, as you get closer to retirement, you might decide to increase your allocation to less volatile investments, or those that can provide a steady stream of income.

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