Published November 2002

Take steps to protect future from bear market

By Kimberly Hilden
SCBJ Assistant Editor

A bear market that has lasted almost three years needn’t mean the end to your retirement dreams, but it should make you take a look at where you are now and how you can get to where you want to be, said Mary Basili, an investment representative with Edward Jones in south Everett.

For some of Basili’s new clients, who came to her office after suffering heavy losses on the market, she has had to go back to square one.

That means analyzing their current portfolio, looking at their expected retirement expenses and assessing their expected income sources. Added to that is the age they expect to retire and their investment risk tolerance.

Do they want to travel, or do they want to stay home to spend time with the kids? What about their family, is their a history of longevity? Should they plan on being retired 30 years or 40 years? These are questions that everyone should ask themselves, Basili said.

Another issue to address is portfolio diversification, she said.

“With the way the market’s been, I like to focus on diversification,” she said. “... If you’re diversified, then when we have had a bad market, your portfolio will be affected, but it won’t see dramatic declines.”

For example, back when the dot-com bubble burst in 2000, investors overweighted with tech stocks took a dive, while those whose holdings included a range of stocks, bonds, government securities and other vehicles were better protected from the tech tumble.

Basili offers other tips for retirement investing:

• Boost your savings — Think of your investment plan as a necessity, just like your utility bill or house payment, and learn to pay yourself first, Basili said. Set aside money on a regular basis to meet your investment goals, even if this means finding ways to cut back on other expenses.
• Think conservatively — When the market was cooking in the late ’90s, some investors enjoyed 20 percent, 50 percent, some even 100 percent, rates of return on their investments, but that was exceptional — not the norm, Basili said. So, when you’re figuring in your expected rate of return on investments as part of your monthly retirement income, think conservatively. Basili usually plugs in a rate that is slightly lower than the market average when she creates a retirement needs analysis. If the return is higher than expected, the client has extra income.
• Be flexible — If you’re planning on early retirement, but you’re uncomfortable with the amount of savings you’ve amassed as retirement nears, be open to re-evaluating your goal. “Some people are looking at either delaying retirement or going back to work,” either full time or part time, to beef up their retirement vehicles, Basili said.

Above all, it’s important to stay invested, diversified and disciplined, said Basili, who can be reached by calling 425-379-9313.

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