by Starla Ross

Created on: January 28, 2011

Planning for the future is important during prosperous times, but it becomes even more vital when the economy is uncertain.  Even though you may have questions about where the economy is going, protect your retirement investments with the following five tips:

1.    Stay the course.

If your retirement account has taken a dive because of the unstable economy, don't sell your stocks quite yet.  Stocks that plummeted back in 2008 may yet rebound.  If you have some time until you retire, staying steady in your investments may make more sense than selling stocks at a loss.  Consider keeping on course and riding out the rough ride of the economy.

If you're feeling uneasy about stocks that have diminished in value, consult a financial advisor to see when it makes sense to sell.  He/she may have more knowledge about specific companies and where particular stocks are headed.
 
2.    Keep saving.

Even in an unstable economy (well, especially in an unstable economy), it's important to keep saving for the future.  Continue to save money in your employer's 401K if it's available.  If your employer offers matching contributions, be sure to contribute at least the amount needed to get the matching contribution.  It's free money, and the matching contribution will add quickly to your retirement portfolio.

If you are unemployed or your employer does not offer a retirement savings plan, contribute to an IRA if you are financially able.  Saving even small amounts will make a huge difference when the economy does rebound.  If you need the tax deduction now, you can contribute to a traditional IRA.  If you'd rather have the tax benefits later, consider a Roth IRA.

3.    Think conservative.

When saving new funds in an uncertain economy, think conservative investments.  This may not be the time to take a risk.  Speak with an investment advisor about your options.  Consider putting new investments in non-risky stocks (well-established, large blue-chip stocks) or spread your investment out by investing in mutual funds.  Consider fixed income funds, especially if you are nearing retirement age.

Think about where you have your investments and make sure your risk is spread around (i.e. asset allocation).  Don't have all your investments in one stock or one type of stock.  Spread your risk by investing in different types of investments.

4.    Leave

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