Three common investment goals

Goal No. 1 -- retirement: Most individuals buy mutual funds for long-term goals, especially retirement.

It is estimated that retirees will need 70 to 80 percent of their final, pre-tax income to maintain a comfortable lifestyle in retirement. If you plan to retire at age 65, retirement savings should last for at least 17 years, since the average life expectancy for a 65-year-old is 82, and continues to rise. Ideally, individuals use a combination of sources to fund retirement.

Goal No. 2 -- education: Many parents and grandparents use mutual funds to invest for children's college educations. Your time horizon is an essential consideration when investing for education: if you start when the child is born, you have 18 years to invest. However, if a child or grandchild is in your future, the time horizon can be lengthened by investing now.

Goal No. 3 -- emergency reserves and other short-term goals: Emergency reserves are assets you may need unexpectedly on short notice. Many investors use money market funds for their reserves. Money market funds alone, or in combination with short-term bond funds, can be appropriate investments for other short-term goals.

The annual review: At least once a year, it is a good idea to review your investment plan. Because different investments grow at different paces, your current distribution of money among stock, bond, and money market funds may no longer correspond with your original allocations. If this happens with your investments, you will probably want to consider whether to redistribute some money to bring your allocations back in line with your plan. In addition to the annual review, wheneveryou make a major life change, it's time to reassess your overall financial situation. Some common examples of life changes:

*Changing lifestyles

*switching careers;

*retiring;

*getting married or divorced;

*having a child;

*buying a house;

*starting your own business; and

*entering college or paying tuition for a child.

Most of these events are likely to affect your ability to invest, your time horizon, and your overall financial picture, both short-term and long-term. It's never easy to find the time to review your investment plan when you're in the midst of any of these life changes, but it's worth making the effort. You don't want to enter a new phase of your life with a plan that was designed for different circumstances.

By staying on course with your asset allocations, you will help ensure that your overall portfolio continues to work effectively toward achieving your investment goals.

(Source: www.ici.org)