Setting The Course For A Strong Financial
Future
by Rusty Field
(NAPSI)-Market volatility continues to influence investors'
financial decision-making. Understanding how market conditions may have an impact on your
personal finances and making educated decisions about long-term
investing is important to your financial well-being.
Setting the course for a strong financial future requires
every investor to think about and answer some important questions including:
• How much will I need? Consider your
immediate and long-term goals so you can make appropriate investment decisions. Take time
to calculate how much you'll need to meet your goals considering employer-sponsored
retirement plans, savings, investments and Social Security. Several free online
calculators are available on the Internet to help you understand what you'll need to help
meet your destination. The American Savings and Education Council's "ballpark
estimate" calculator can be found at www.asec.org/ballpark.
• How much do I have? Knowledge is
power. Understand your investments and enhance the rate of return on all of your
investments. For example, starting in 2002, you'll be able to put more money towards
retirement. Between 2002 and 2008, the maximum yearly IRA
contribution will gradually increase from $2,000 to $5,000. And, by 2006, employers can
raise limits on elective deferrals progressively to $15,000, up from the current $11,000
annual maximum. Workers who reach the age of 50 can contribute even more to their IRAs and 401(k) plans if they qualify for new catch-up
provisions.
• What should I do? Based on your
short- and long-term goals, be sure you allocate your assets wisely. Practice asset
allocation based on your financial goals, the length of time you'll be able to keep your
money invested, your risk tolerance and your overall financial circumstances.
Take full advantage of employer-sponsored savings plans like
401(k)s and other retirement savings vehicles, such as IRAs, that protect your savings
from taxes.
• How do I know? Work with an
investment professional like a financial advisor to help ensure you're making the right
investment decisions and setting the right course to meet your goals. Ask your employer
about employee financial education programs.
Review your plan annually and when you experience major life
changes like job transitions, buying a home, marriage, the birth of a child, education
expenses, retirement, etc.
If you're worried about the performance of the market,
remember the stock market's long-term trend has been upward, or capital appreciation.
While past performance is no guarantee of future investment results, the stock market has
bounced back from every major market downturn to date.
During times of market volatility, consider simple strategies
to help maintain your confidence in the market's long-term growth potential including
staying diversified, avoid trying to time the market, practicing dollar-cost averaging and
staying focused on your goals. Ask your employer about offering a financial education
program in your workplace to help address these strategies.
For more information about setting the course for a
strong financial future, contact American Express at (800) GET ADVICE or visit the web
site at www.americanexpress.com/advisors.
For information that your employer may be interested in to help them offer financial
education in the workplace, have them call (800) 745-6684, or send an e-mail to feps@aexp.com. Rusty Field is Vice President, Financial
Education and Planning Services at American Express.
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