Investment Considerations

When making long-term investments for retirement, staying ahead of inflation can be important.

Here are some items to consider when choosing your investment mix.

#1 Don’t Be Too Conservative with Your Long-Term Investments.

Some people invest heavily in conservative investment vehicles (for example, money markets or CDs) to avoid investment (short-term) risk. By taking the “safe” route, the purchasing power of these investments can be easily overcome by inflation in the end. Conservative investments have historically provided lower returns than riskier investments, such as stocks.

#2 Diversify.

It’s hard to predict how one investment will perform in any given time period. By putting your money in more than one type of investment, you lower your chances of experiencing a serious investment loss. For this reason, you may want to diversify the money in your Annuity Plan account by investing in three or more of the investment options available to you.

#3 Hold on to Long-Term Investments.

The financial markets are constantly changing. You might see a certain investment option perform very well in one year, and be tempted to change your investment options in the hope that the trend will continue. Keep in mind that an investment’s past performance is no indication of its future performance. Although stocks often fluctuate in value, they have historically been reliable long-term investments. It often pays off to choose a long-term investment strategy and stick with it.

#4 Do Research.

Do your homework before choosing an investment. It’s important to understand your investment options. Most investments are rated, which can give you some indication of the risk involved. Read an investment’s prospectus or annual report for additional information.

#5 Seek Professional Advice.

It’s a good idea to seek professional financial advice when determining your investment strategy.

When you diversify, you spread your money across different investments. This helps reduce the loss of your initial investment by preventing large losses from any one investment.

It often pays off to choose a long-term investment strategy and stick with it.