November 17, 2010


Five habits to invest for success

"Some good solid financial habits — nothing fancy or sexy," are what Marian Davis of financial services firm TIAA-CREF, one of Emory's retirement plan vendors, shared at a Nov. 12 financial workshop held in the Harland Cinema. Davis explained her "Five Habits of Highly Successful Investors":

1. Set goals. "Make time to write goals. Be realistic and flexible, review them regularly." Davis also provided steps for goal-setting.

2. Tax-defer as much as possible by considering taxes when choosing products for retirement accounts. "If you're not taking advantage of the match, I encourage you to do it when you walk out the door," Davis said about the contribution Emory makes to employee 403b plans. "And you won't even feel it."

3. Diversify your portfolio. Have equities (stocks) and non-equities. Then within each, diversify, including U.S. stocks, international ones, small-company stocks, large-company stocks. In nonequities, diversify with government bonds and corporate bonds and real estate. "Doing that over time helps reduce volatility," she said, though it's not a guarantee accounts won't go down.

4. Don't try to time the market. Davis' two critical steps for "making sure you're invested properly instead of timing the market" are rebalancing and reallocation. Reallocating assets in an account changes the mix. Rebalancing gets the assets back to your original target. "Sell some investments that have done well and buy some that are down," Davis explained about rebalancing. 

5. Pay attention to expenses, those management fees charged by the companies that handle your investments. You can find these amounts, she noted, in the prospectus of the investment.

Knowledge resources for the savvy investor include classes, the Internet, the library, and meetings with retirement plan vendors like her, Davis said. Davis also encouraged employees to download the  Emory Employee Retirement Guide on the Human Resources website, which she had done before the workshop.

"As a general rule, you need to replace about 80 percent of your pre-retirement income," she said.

"Retirement may seem so far away. But time goes quickly and you have competing demands — family, student loans, your career," said Davis. "I encourage you to get started as soon as you can."

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