IS IT TIME FOR YOU TO DO A REBALANCING ACT?

Chances are that when you first opened your retirement savings account, be it from scratch or by transferring assets from another account, you carefully considered how you wanted to allocate your funds. Maybe you studiously read the prospectus, weighing the risks and benefits of each investment alternative. Perhaps you sought and heeded the advice of a trusted associate or adviser, someone who knows more about investing than you do.

Regardless of the approach you used, there's an excellent chance that if you were invested in equities during the 1990s your account enjoyed remarkable growth. While this is by no means a problem, it raises the issue of just how closely you wish to adhere to your original retirement investment strategy. The unprecedented gains enjoyed by many equity funds during this period have distorted the original proportions in which many individuals allocated their assets. Investors who may have designed a portfolio of, for example, 70 percent equities and 30 percent fixed income securities, almost certainly saw an even greater tilt in the equities direction in recent years. This isn't necessarily a bad thing, but you should revisit your investment goals and consider whether your portfolio weightings are ideally suited to your present goals.

It may very well be that your goals have changed since you last considered your strategy. Be it one year, five years or ten years since you last settled on an investment strategy for retirement, you are now that much closer to the day when you will need to withdraw those funds for living expenses. If your account has increased markedly in recent years, you may try to "lock in" those gains by reallocating some funds from equity investments to more stable fixed income vehicles. This is especially true in the current volatile equity market environment. One caution, however - be careful of market timing. Trying to predict the direction of the markets is a risky business that often trips up even the most experienced market experts.

This isn't to suggest that you should radically alter your portfolio to emphasize fixed income securities. Experts advise retirees to maintain a growth component in their portfolios, as retirement can last upwards of 30 years. But the overriding point is to continually review your portfolio allocation and its applicability to your current situation and goals.

How best to get started? Review your quarterly statement and compare the amounts you currently hold in the investment alternatives available to you. Is this the allocation you had in mind? If not, are you comfortable with the risk this portfolio poses or would you be better served by transferring amounts to restore the portfolio to the balance you began with? These are questions only you can answer.

To help you answer those questions, refer to the prospectus that applies to your account. Refamiliarize yourself with the investment objectives of the investment alternatives available to you and consider their applicability to your situation as it now stands and as you believe it will evolve in the near future.

Another invaluable resource is an investment alternative's presentation in the Annual and Semi-Annual Report of the Separate Account(s). Important features here include detailed portfolio listings, sector breakdowns and illustrations showing the growth of $10,000 in the investment alternative over the most recent 10-year period. Such an illustration can suggest the volatility to which the investment alternative is subject, and how a similar investment might turn out in the future. Of course, the one thing the illustration can't do is offer you a guarantee of future investment results.

Once you've digested all this information, you should have a pretty good idea of the range of possibilities afforded by the investment alternatives available to you. You should then be able to reassess your situation and decide if a portfolio rebalancing is in order.

The above article is for general information only and is not intended to provide specific advice or recommendations for any individual. Consult your attorney, accountant, or financial or tax advisor with regard to your individual situation.

Mutual of America Life Insurance Company is a Registered Broker-Dealer.