Carrie Schwab Pomerantz

With the continuing economic downturn, many folks are avoiding their portfolios. It's not surprising. After all, there are a lot more immediate financial concerns on people's minds. But now's not the time to put your head in the sand. If you want better investment results tomorrow, you have to have a plan today. And while there's no silver bullet for ensuring gains, you can take action to make sure you're still on track and prepared for whatever the future holds.

Whether you've been investing for a long time or are fairly new at it, there are four basic steps to making sure your investing plan is one you can follow no matter what the market it doing. Take these steps now, and you'll be able to look the economic new year squarely in the eye.

-- First and Foremost, Focus on Your Overall Mix of Investments. You've probably heard it many times, but the overall mix of stocks, bonds and cash in your portfolio -- your asset allocation -- is the foundation of your investment plan in both good times and bad. If you're comfortable with this mix, it's easier to stick with your plan.

However, during volatile markets, it's not unusual for an asset allocation plan to go out of balance. So you can't just sit back and ignore it. You need to make sure it's still what you want -- and make changes if necessary. Take a look at your asset allocation now. Start by asking yourself a few questions:

-- Has the percentage of stocks, bonds and cash in your portfolio changed because of market conditions?

-- What are your goals? Money that you plan to use in the next three to five years should not be in stocks.

-- How about your feelings toward risk? Have they changed? Given the recent market decline, does your asset allocation still match your risk tolerance?

If your current asset allocation no longer suits you, you need to get it back in line. This may require some rebalancing -- selling some asset classes and buying others -- to get back on target. For instance, if you started with an allocation of 65 percent stocks and 35 percent bonds and cash, and you now have only 50 percent stocks, you may need to sell some of your bond and cash investments and buy more stocks. With the current market, you may find some good buying opportunities.

Conversely, if market ups and downs have you thinking more conservatively, maybe the new balance is just fine. The important thing is to take an honest look and make appropriate changes now so that you can be comfortable with your allocation over the long term, even when there's a loss.

Carrie Schwab Pomerantz

Carrie Schwab Pomerantz is a Motley Fool contributor.

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