Investment strategies change with life stages

Certain things always precede decisions on the issue of investments.

1. Meet with your financial professional.

2. Determine your priorities, wants and needs.

3. Set future goals on these important items.

4. Verify your willingness and ability to take risks.

5. Develop information on present assets.

Once these steps are completed, you are ready to begin to deal with the issue of investing.

Investing is a lifelong process. The first part of a long-term investment strategy is a disciplined savings habit.

Regardless of whether you are saving for retirement, a new house or just that extravagant dining room set, you will need to develop strict savings habits. Regular contributions to a savings investment account, such as your retirement savings plan, are often the most productive.

Once you have started saving on a regular basis, you'll soon have to decide how to invest the money you are saving. Regardless of your stage of life, you will have to consider your financial needs and tolerance for risk.

Time and risk tolerance

All investing involves a certain amount of risk. How well you tolerate price fluctuations in your investment portfolio will need to be balanced against your re-quired rate of return in determining the amount of risk you can bear.

An offsetting factor to risk is time. If you have a long investment time horizon, you will probably be able to tolerate more risk because you have time to make up any early losses you may experience.

For a shorter-term investment, such as saving to buy a house, you probably want to take on less risk and have more liquidity in your investments.

Strategies for common events

Everyone lives their lives differently, and everyone has complicated emotions about money, so investment decisions are highly personal and unique to each individual.

Nonetheless, throughout their lives, most investors face some similar situations.

Where are you in the cycle? How close you are to retirement certainly affects how you invest your retirement money, but what about other life stages that aren't so closely related to age?

Let's say you are 40 and just now having your first child. You will need to decide how to balance your financial situation to account for the additional ex-penses.

Perhaps you need to supplement your in-come with income-producing investments.

And don't forget that your child will be finishing up college right around the time you may be ready to retire.

In this situation, your financial needs most certainly will change, and maybe your risk tolerance as well.

Investment triggers

The following are examples of other common life events, and some things you might consider when making investment decisions at that time.

When you get your first real job, start a savings account to build a cash reserve and start a retirement fund, making regular monthly contributions.

When you get married, re-evaluate your investment contributions and allocations, taking into account your combined income and expenses.

When you want to buy your first house, consider investing some of your non-retirement savings in a short-term investment, specifically to help fund your down payment and to pay closing and moving costs.

When you have a baby, increase cash reserves, increase your life insurance and start a college fund.

When you change jobs, review your investment strategy and asset allocation to accommodate a new salary and different benefits. Consider your distribution options for your company's retirement savings or pension plan. You may want to roll money over into a new plan or individual retirement account.

When all your children have moved out of the house, boost your retirement savings contributions.

When you reach 55, review your retirement fund asset allocation to ac-commodate the shorter time frame for your investments and continue saving for retirement.

When you retire, study carefully the options you may have for taking money from your company retirement plan. Discuss your alternatives carefully with your financial representative. Review your combined potential income after retirement and reallocate your investments to provide the income you need while still providing for some growth in capital to help beat inflation and fund your later years.

(William O. Woody CLU, ChFC, is a partner with Stovall-Woody Associ-ates, and an investment advisor representative of AXA Advisors LLC).