Articles - Archived Money Matters

Taking Control of Your Investments

How are your investments doing? Not so hot? You may be surprised to know that you have more control than you think. Investment performance is not just about how much your investments are going up or down. Following are three things you should know:

1. Your goals, risk tolerance and time horizon should dictate how your funds are invested. If your goal is to generate income to help you meet expenses, a portfolio that grows, but does not pay income, is not going to be in your best interest. Rather, make sure your portfolio is invested in a combination of assets that will pay out at regular intervals. Remember that as your needs change over time, your investments should too.
2. Fees affect investment performance. If you have an account made up of stocks, bonds and mutual funds, and you invest $10,000 in a 4 percent front load (commission) fund, the $400 load is immediately taken. This means you're really only investing $9,600. The fund has to perform extra well to "make up" that fee. Commissions on individual trades can add up to well over 1 percent per year. And if you're paying a management fee of say, 1 percent, the performance of your portfolio is greatly reduced.
3. Price history does not guarantee future performance, but it is a good indicator. Look back a year, five years—even 10 years—to get an idea of how assets are likely to perform. Compare similar stocks in the same industry, or mutual funds with the same objectives, and select the fund with the greatest likelihood of success.

Sound like a lot of work? As a local government employee, you have the benefit of joining Local Government Federal Credit Union, where members have access to free financial counseling and planning to assist with situations just like these. Call us at 877.367.5428 or email info@lgfcu.org for help!