L’Observateur / May 9, 2000

The beginning of a new year and a new century can be a time to make resolutions and plan for your future. So, after resolving to lose those holidaypounds and spend more time with family and friends, review your plans for retirement. Making a few smart investment moves now could have a positiveeffect on your retirement years.

Think Long Term If retirement is many years away, you have the freedom to invest for long- term performance instead of immediate results. Review the stockinvestments in your retirement plan and consider adding to them if their percentage is low. While stock prices can vary daily, stocks’ long-termperformance generally has outpaced other types of investments.

Diversify Too much of one thing may not be good when you are investing for retirement. To avoid a major drop in your account’s value when prices godown, don’t put all your retirement money into one type of investment.

Instead, diversify by choosing portfolios that give you a mix of investment types. The risk of loss in your retirement plan may be reduced because theprice of one investment often will rise (or not drop as much) when the price of another falls.

Fight Inflation Inflation slowly eats away at the real value of your retirement plan balance.

You can fight inflation by including in your portfolio investments with returns that are likely to beat the inflation rate. Historically, stocks and bonds haveoutpaced inflation while money market portfolios typically have returns close to the rate of inflation.

Factor in Health Care Costs

The cost of health care is on the rise and, in the future, insurance companies and Medicare are likely to shift more of the burden to retirees. If you areunprepared, one serious illness could have a devastating effect on your retirement savings. So, when you are calculating your retirement expenses,factor in possible future health care costs.

Stay Involved Don’t ignore your retirement plan once it is in place. You should follow yourinvestment results to make sure they are on the right track. And remember,any significant changes in your life may require changes in your retirement planning. Another smart move would be to add, review my retirement plan toyour list of New Year’s resolutions.

Alan S. Moore is a Financial Advisor of Legg Mason Wood Walker, Inc., adiversified securities brokerage and financial services firm that is a member of the New York Stock Exchange, Inc.

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