Investment Resolutions for the Year 2003

Chart of the Week for December 27, 2002-January 2, 2003

For those making resolutions this week, we’d like to offer a few suggestions relating to financial well-being. Out of the many possible ideas we could offer, we’ve culled the list to the three most important— those that will have the greatest impact on the value of your account on the day you retire.

1. I will build my portfolio with multiple dissimilar funds for optimal diversification.
   Whether retirement is decades away or just months, reducing risk should interest everyone. By spreading your portfolio among several funds with different investment styles and objectives, overall risk will be reduced.
   
   The key word is dissimilar. Risk is only reduced when funds’ investment objectives and characteristics are complementary— not when they are identical.
   
   
2. Once I’ve diversified, I will rebalance my portfolio at least once a year.
   Inevitably your portfolio mix will fluctuate around your target allocations throughout the year. Hot and cold asset classes will shift the weightings of your funds, changing the risk profile of your portfolio. Of course, out-of-favor investments will not always remain that way. To take advantage of the rebound in an asset class that has underperformed, rebalance your portfolio by selling shares of funds that have outperformed and reallocating to funds that have underperformed.
   
   The New Year is an ideal time to check your 2002 results, review your fund allocations and rebalance to an appropriate level of risk. Remember, 2002’s strong bond market may not be repeated in 2003.
   
   
3. I will increase my contribution to my retirement savings.
   The surest and least risky way to reach your retirement goals is to contribute more to your retirement plan. The magic of compounding allows the money you contribute today to grow over time, sometimes substantially. And the earlier you start, the greater effect compounding can have on your retirement balance.
   
   Even a modest increase in your contribution amount will enhance your security in retirement. If 2003 brings a raise, bonus, or cost-of-living adjustment, that’s the perfect opportunity to up your contribution rate.
   
   

Best wishes for peace, health, and prosperity in the New Year!

* This information is intended for educational purposes only and is not to be construed or relied upon as investment advice. Neither the information nor any opinion expressed constitutes an offer, or an invitation to make an offer, to buy or sell any securities. It does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors should seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended here and should understand that statements regarding future prospects may not be realized. Past performance is not necessarily indicative of future performance. Vantagepoint securities are sold by prospectus only which should be consulted carefully prior to investing any money. Vantagepoint securities are distributed by ICMA-RC Services LLC, a broker dealer affiliate of ICMA-RC, member NASD/SIPC. ICMA-RC Services LLC, 777 North Capitol Street NE, Washington, DC 20002-4240. 1-800-669-7400.