With a little over 15 years left until he retires, Harry Moore is a late-blooming investor who hopes to reap the benefits of a well-constructed investment portfolio. It has been three years since he developed a formal personal investment plan consisting of an Individual Retirement Account [IRA] and a separate account where he holds individual securities, such as stocks and real estate investment trusts [REITs]. “I wish I had planned earlier than I did,” he confesses.
Moore, a 46-year-old divorcé from St. Louis who is an airport engineer at the Lambert-St. Louis International Airport, invests about 10% of his total $54,000-a-year salary. Using a dollar-cost-averaging strategy, he earmarks a total of $300 a month — or $3,600 a year-to his two accounts, $250 to the individual account and $50 to the IRA account. He invests this amount in addition to the $1,200 a year in pre-tax dollars he contributes to his 457 deferred compensation plan, which will serve as his pension.
On the advice of his broker, Pamela Bonds, an Edward Jones investment representative in Olivette, Missouri, he maintains a more conservative, low-risk, buy-and-hold strategy — an adjustment from the aggressive style he had when he began investing three years ago. Instead of being heavily weighted in technology stocks, he now has his separate investment account consist of blue chip and aggressive growth stocks, like Philip Morris [NYSE: MO], Chesapeake Energy [NYSE: CHK], and Walgreen Co. [NYSE: WAG] as well as cash or cash equivalents, like money market funds.
To diversify his portfolio, Moore took his first step into the world of real estate investment trusts, purchasing 40 shares of the Duke Realty Corp. REIT for his individual investment account in April. “Real estate is something that will appreciate in time, and these funds tend to have a pretty high dividend return, and to me that’s attractive,” Moore explains. “It also fits into the growth and income concept that I am in,” he adds.
As for Moore’s IRA account, Bonds has him invested in growth and income funds, like Putnam Growth & Income Fund (PGIBX), and the Van Kampen Utilities Fund (VKUAX). This will help him take advantage of a market recovery when it rebounds.
Although Bonds would like to see Moore increase his dollar-cost-averaging program and invest more into his IRA, she concedes that moderate investing is better than not investing at all. She characterizes Moore as “an average investor that doesn’t have a lot of money to invest, but certainly recognizes the value of investing and wants to do his part to build a retirement portfolio a little bit at a time.”
Overall, Moore is content to maintain a long-term approach to investing and a positive attitude about the market, and says others shouldn’t be intimidated by its ups and downs. “Understand that risk is a part of the market,” he says.
Bonds agrees, and offers advice that reflects her company’s motto: “It’s time in the market, not timing the market,” she says.