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Know where you stand

Updated: May 3, 2013 12:14PM

It's amazing how easily fear overcomes resolution, and how easily long-term investors turn into panicked sellers in a market decline. That's what happens when you don't have a plan that you understand, and a commitment to stick to the plan.

Words like "diversification" or "asset allocation" seem to come from a different language. But the falling balances in your retirement account are unmistakable signs that your chances of retirement are going down the drain.

Don't panic -- and don't rely on platitudes, even the ones I've often given! True, over the long run, there has never been a 20-year period where you would have lost money in a diversified portfolio of large company American stocks with dividends reinvested.

But do you have the long run to wait, and the discipline to hang in there? Or do you need some of your portfolio in safe, "chicken money" alternatives that will let you sleep at night?

Even in the midst of a market decline that could be protracted by an oncoming recession, it's not too late to make a sensible plan. Here are three sources of reliable advice -- and they're at your fingertips -- in time to do some work this weekend.

Doing the math

Mutual fund giant T. Rowe Price has just introduced a new and improved online retirement investment and income calculator. You'll find it at /RIC. Using sophisticated "Monte Carlo" modeling, it takes the information you input about your desired retirement age, current income, hoped for retirement income, and your current amount and rate of savings, to give you a realistic assessment of how far short of your goals you're likely to fall -- and how much more you need to save.

The calculator will also recommend appropriate portfolio asset allocation between stocks, bonds, and safer short-term investments that is most likely to help meet your goals.

Revving up your portfolio

FinancialEngines is a registered investment advisory service offered by the largest corporations to their employees, to help them make personalized investment decisions. You can't get access as an individual -- except through my Web site, There you can click on the blue box marked Financial Engines and get a free one-year trial to their service. Create your own PIN-protected account, then input your mutual funds and stock investments. They'll make personalized recommendations to help reach your goals. (This is done as a favor to my readers, and I have no relationship with the company.)

For a real workout

If you're willing to do a more intensive online process, go to, the Web site of the nonprofit Employee Benefit Research Corp., and then click on "Ballpark Estimate." While they don't give personalized investment information, they do a very thorough job of analyzing your current savings rate and letting you know if you're on track to reach your desired retirement income.

These are the days when a fee-only financial planner really can be helpful. And if you have a long relationship with a responsible stockbroker or other planner, you'll get advice that is not commission motivated. It's not easy to go through a bear market alone. And you know that bear markets end only when even the most disciplined investors give up and sell. We're not there yet. So be prepared. And that's The Savage Truth.

Terry Savage is a registered investment adviser. Distributed by Creators Syndicate. Copyright Terry Savage Productions Ltd.

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