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These are scary times for anyone saving for retirement. The current roller-coaster ride of economic ups and downs is enough to cause stomach churning in all but the most steely-nerved passengers.

            So what does it all mean?

            No one knows for sure, of course. However, most experts predict that the long-term future will most likely mirror the long-term past. That is, a steady pattern of economic growth with periods of expansions, recessions, and downturns in the market.

            Investing for a financially healthy retirement, they tell us, still calls for the same kind of common sense approach that has worked so well in the past. For example:

Don’t Try to Time the Market

 “It’s best to invest regularly, without regard for the general condition of the economy or the direction of the stock market,” says Darrell J. Canby, CPA/CFP.

“Timing the market, trying to determine the best time to buy specific stocks, rarely works,” he says. “You might get lucky once in a while, but your luck isn’t likely to last.”

Waiting for stocks to hit the “bottom” before you buy or hit the “top” before you sell has proven to be a loser’s game for investors. Select the stocks or mutual funds that you buy only on the basis of sound fundamentals.

● Avoid Reacting to Daily Economic Reports

“In an effort to sell newspapers and air time, investors are trained by the media to look out for the next economic number of the day,” says Jordan Kimmel, Magnet Investment Group, Randolph, NJ. “Whether it’s employment numbers, capacity utilization, or inflation statistics, there’s always a number of the day to tempt investors into overreacting. No investment strategy is better than identifying superior companies and holding them while letting your money compound over time.” 

Maintain an Appropriate Asset Allocation

            One point that virtually all financial advisors agree on, is the critical need for you to maintain an asset allocation suitable to your personal circumstances. Asset allocation refers to the process of dividing your investable assets among stocks, bonds, and cash.

The mix that’s right for you at a given point in your life will depend on such things as your age and your tolerance for risk. For an asset allocation calculator that takes these and other circumstances into consideration, log on to

http://www.forbes.com/tools/calculator/asset_alloc.jhtml.

Diversify Your Equity Investments

Whatever portion of your portfolio you have invested in equities, make sure they are properly diversified. Too heavy an investment in a single industry or a single company will put you at the mercy of a serious downturn in that company or industry.

“Make sure you have proper diversification for your risk level and time horizon,” says Certified Financial Planner (CFP) Greg Womack. Diversifying by selecting individual stocks is folly for the typical amateur investor, say many investment professionals.

Mutual funds offer both diversification and professional management.                                     

            ● Rebalance Your Portfolio at Least Once Each Year

            Once you satisfy yourself that you have allocated your assets in the manner that’s right for you, it’s important to rebalance at least once a year. As the price of equities goes up or down, the ratio that you have established will change. If the value of your equities has risen, you may want to sell off some of them to restore your original ratios. If their value has dropped, moving more cash into equities may be appropriate.

            ● Stay the Course

“Creating a plan and sticking with it under all market conditions is the way to maximize your returns,” says Kimmel. “One helpful technique in this regard is called dollar-cost-averaging — putting the same amount of money into equities or mutual funds at regular intervals regardless of swings in the market. That way, when prices are higher, you are buying fewer shares; when prices are lower, you are buying more shares. Dollar-cost-averaging is an effective way to minimize the effects of emotion in financial management.” 

“It’s human nature to chase hot sectors that have already made a significant move,” says Womack. “It’s also natural to panic and sell-out when everyone else is doing the same. While it may seem natural, it’s not the smart thing. It’s important to have an investment strategy and stick to it. If it’s in the headlines and everyone else is doing it, you’re probably too late.”

There is, of course, much more to the maintenance of a retirement portfolio well suited to promoting a good night’s sleep during these scary times. However, sticking with these common sense fundamentals will go a long way toward achieving that end. HBM

William J. Lynott is a home-based writer who covers a variety of money and finance topics.