fi nancialforum Wealth-Building I

Online Calculators How much money will you need in retirement? Get an estimate by using MOAA’s financial calcu- lators at www.moaa.org/ calculators.

44 MILITARY OFFICER FEBRUARY 2015

Investing isn’t as complicated as it’s made out to be. A few simple strategies can help ensure you have a comfortable retirement. By Lt. Col. Shane Ostrom, USAF (Ret), CFP®

I wish I had a dollar for every time I heard about someone’s cosmic investment strategy. Maybe it works for that person, but I’m not so sure. Investor psychology tells us we tend to remember our gains and forget our losses. Plus, there are trading costs to consider. Put the gains, losses, and costs to- gether, and what’s their net performance? Surveys and analyses from investment

fi rms are not encouraging about individual investors’ trading successes. Even profes- sionals pick numerous stocks hoping a small number of selections will carry the load for the majority of picks that won’t work out. The majority of mutual fund managers can’t beat the free-fl owing mar- kets we pay them to beat. The average investors I meet who are

saving for a dream retirement tend to think investing is naturally complicated. Can you blame them? Look how investing is portrayed in publications and on TV, radio, and the Web. It’s a process heavily laden with detailed numbers, analysis, and market-sensitive, time-critical trades. “If the pros can’t get it right, how can I?” is what I hear. Truth is, it doesn’t have to be compli- cated. Don’t believe the talking heads and marketing hype. Investing can be simple for the great majority who are building wealth over the course of their working lives. The ingredients for wealth creation to retire comfortably are pretty simple:  Contribute to your retirement account regularly — every pay period.

 Invest 10 percent or more per pay check.  Have a portfolio heavier in stocks than bonds/cash. (The proportion of stocks typically decreases as you close in on retirement but normally will remain at least 30 to 50 percent of your portfolio to maintain some growth potential in your assets in retirement. We’re talking about mutual funds you purchase in your retirement accounts.)  Don’t take loans or withdrawals from retirement accounts.  Rebalance your portfolio to maintain your original stock/bond/cash mixture.  Increase your contributions after raises, promotions, and job changes — max it out. The above ingredients ensure that

as the stock market rises and falls over the years, your steady contributions buy more stock ownership shares during depressed market periods. It is a fun- damental wealth-building strategy that lower stock markets are necessary for us to build wealth. Down stock markets are normal occurrences that are historically short-lived. We never know what the stock markets will do in advance, so regu- lar contributions ensure you are buying stocks on the cheap when stock prices fall. As the stock markets return, you’ll be happy with the results.

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— Lt. Col. Shane Ostrom, USAF (Ret), is a CFP® and benefi ts information expert at MOAA. Visit www.moaa.org/fi nancialcenter for other re- sources. Email specifi c benefi t and fi nance inqui- ries to beninfo@moaa.org.

PHOTO: SEAN SHANAHAN