Treat an Ailing Portfolio with Five Tips

People recognize the importance of lookingand feeling good, but they should also realizethat it is equally as important to look afterthe health of their finances. If your portfolio'sreturns are looking a bit sickly and you aren't ontrack to reach your financial goals, there are five simplethings you can do to develop a prescription thataddresses what is ailing your portfolio.

Savings and Goals

Just as vitamins are the building blocks of ahealthy diet, your savings are the foundation of yourportfolio. Whether you have deductions taken directlyfrom your paycheck or you simply set a little moneyaside each month, you should save on a regular basis.Once you have the concept of saving down, you'reready to consider ways to get your portfolio in shape.

First, consider what your goals are and why you'resaving in the first place. Perhaps you're putting asidemoney for retirement, your children's educations, ormaybe to take the trip of a lifetime. Determining thereasons that motivate you to invest will help you figureout what investments you may want to consider.That way, you will recognize when and why you'llneed your money.

Consider:

Second, before you take the leap into buying stocksor bonds, look at where you currently stand financially.If you have considerable credit card bills or high-interestloans, you may want to consider paying those off beforeyou begin. It is important to invest early so that you havemore time for your investments to grow, but if you'repaying out more money to service your debt than you'rebringing in through your investments, you are really losingmoney. If you're paying an annual 18%interest rate on your credit card balance while making5% from an investment, you would be better off financiallyif you paid down your credit card bill.

Diverse Holdings

Once you know what your goals are and whereyou stand financially, take a look at what your holdingsare. Make sure they are solidly diversified. Youshould have an adequate mix of stocks, bonds, andcash, with your allocation depending on how muchrisk you are comfortable with. Within each type ofinvestment, you should diversify even further. Forinstance, your stock holdings should be in a variety ofsectors (eg, energy, technology, health care, and financials).The fixed-income portion of your portfolio canalso be allocated across a range of maturities, interestrates, and even different types of bonds (eg, corporateand municipal).

Next, when you purchase stocks, you should considerlooking for value. Look for companies withstrong fundamentals, such as a strong balance sheetand cash flow statement. Also, you may want to thinkabout purchasing shares of companies that consistentlydeliver a dividend.

Valuable Advice

Finally, obtain help if you need it. Sometimes one ofthe best investments you can make, especially if youaren't a seasoned investor, is enlisting the assistance ofa financial consultant and talking about your goals.They can typically show you what investment optionsare available, and they will make sure you're on theright path to achieve your dreams.

Just as you might set a goal for your ideal weightand work to achieve it over time, you should also setgoals for your finances. Regardless of how yourinvestments are performing now, there is always timeto whip your portfolio into shape.

is vice president, investments,

and a financial consultant with AG Edwards in

Hillsborough, NJ. He welcomes questions or comments

at 800-288-0901 or www.agedwards.com/fc/joseph.lagowski. This article was provided

by AG Edwards & Sons, Inc, member SIPC.

Joseph F. Lagowski