Why and How to Manage Your Investments

The gyrations of the market over the last five years have dampened many investors’ hopes of easy riches. According to The New York Times, investing isn’t the popular hobby it once was; personal finance magazine subscrip tions are down; and the number of investment clubs has declined from a peak of 37,000 clubs in 1998 to 21,000 as of June 2004. In a recent survey of 1,100 people who own stocks and mutual funds, the National Association of Investors Corporation (www.better-investing.org) discovered that investors believe that stocks are worth buying but are uneasy over the volatility of stock ownership. This apprehension is not unfounded. Stocks slumped for most of 2004, falling by as much as 4 percent. However, by the end of October 2004, stocks rebounded, and the S & P 500 completed the year with an increase of 8.99 percent.

Monitoring your portfolio in a volatile market is very important. You can select the best investments, but if you don’t have a way to track your gains and losses, you can lose time and money. Good record keeping is invaluable for calculating your taxes, preparing for retirement, estate planning, and taking advantage of opportunities to increase your personal wealth. Sources on the Internet can assist you in keeping careful records of every stock, mutual fund, bond, and money market security that you own. Setup time can be as little as ten minutes. You can update and monitor your portfo lio once a week or once a month. Your investments can be in one portfolio (for example, your retirement fund) or many (say, your retirement fund, an emergency fund, and your children’s college fund). You can also track invest ments that you wish you owned or that you’re considering for investment.

The Internet offers programs that automatically update your portfolio with daily price changes and then re-tally your portfolio’s value to reflect those changes. Many portfolio management programs can

• Help you determine how much you own in cash, stocks, and bonds
• Show you how these investments line up with your asset allocation targets
• Indicate what returns (capital gains or losses) you’re receiving
• Compare returns with your financial requirements
• Alert you that securities are at the prices at which you want to buy (or sell)