Investment Resolutions for the Year 2000

Chart of the Week for December 31, 1999-January 6, 2000

For those who will be making resolutions this weekend, we’d like to offer several suggestions relating to financial well-being. Out of the hundreds of 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. Of course, out-of-favor investments will not always remain that way. To take advantage of the rebound of an asset class that has underperformed the market, rebalance your portfolio by selling shares of funds that have performed strongly and reallocating to funds that are now underrepresented.
   
   The New Year is an ideal time to check your 1999 results, review your fund allocations, and rebalance to an appropriate level of risk. Remember, 1999’s strong stock market results may not be repeated in 2000.
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 2000 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 being provided for educational purposes and is not intended to be construed as or relied upon as investment advice. ICMA-RC does not offer specific tax or legal advice. Individuals are advised to consider any new investment strategies carefully prior to implementing. Past performance does not guarantee future results. Investment returns and principal value will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data illustrated. For performance data current to the most recent month end, contact ICMA-RC Services, LLC by calling 1-800-669-7400 or by writing to 777 North Capitol Street, NE, Washington, DC 20002-4240, or by visiting www.icmarc.org. Please consult both the current Vantagepoint Funds prospectus and MAKING SOUND INVESTMENT DECISIONS: A Retirement Investment Guide carefully for a complete summary of all fees, expenses, charges, financial highlights and investment objectives, risks and performance information prior to investing any money. Vantagepoint securities are distributed by ICMA-RC Services LLC, a broker dealer affiliate of ICMA-RC, member NASD/SIPC. For a current prospectus, contact ICMA-RC Services LLC, 777 North Capitol Street NE, Washington, DC 20002-4240. 1-800-669-7400.