Professional Assistance in Uncertain Times

Especially in times of market volatility, it is wise to get professional assistance. Your Lincoln Investment financial representative can help you avoid some common mistakes and make some better choices.

Don't go it alone

Research shows that individual investors often fall short when it comes to managing their own investments. According to the 2008 Quantitative Analysis of Investor Behavior conducted by Dalbar, one of the nation's leading financial services market research firms:

• Over the 20 years ended December 31, 2007, the average equity fund investor earned just 4.48% — underperforming the S&P 500 by more than 7% and outpacing inflation by a mere 1.44%.*
• Bond investors fared even worse, with only a 1.55% return.

Average Investor Annualized Returns vs. S&P 500 and Inflation**

Source: Dalbar from Investment Company Institute, Morningstar Associates and Lehman Brothers

The conclusion: Return on investment is more closely linked to investor behavior than to investment performance. The Dalbar study concluded that investors often try to time the market, moving in and out in an attempt to chase returns. Those mutual fund investors with the discipline to hold their investments through market swings typically earn higher returns. Your Lincoln Investment financial representative can help you develop strategies that will keep you on course.

*Past performance is no guarantee of future results.
**S&P 500 Index is an index of 500 of the largest exchange-traded stocks in the United States from a broad range of industries whose collective performance mirrors the overall stock market.

Don't get emotional

One reason that investors generate such poor performance on their own can be attributed to the Cycle of Emotion. People rarely invest when they are pessimistic or skeptical about the market because it goes against human nature. They tend to wait until they are optimistic before buying stock. Unfortunately, this is the wrong time to buy because prices are usually at their highest.

Similarly, people wait for all the normal emotions to set in such as fear, panic and finally despair before selling stock — again at exactly the wrong time because prices are now low.

Your Lincoln Investment financial representative can help prevent you from acting on whim or emotion and keep you on track to achieve your long-term goals.

Don't become unbalanced

Even if you are a conscientious investor with appropriate diversification and a long-term strategy, you still need to rebalance regularly to bring your portfolio back to your original asset allocation mix. This is necessary because some investments grow faster than others. By rebalancing, you'll ensure that your portfolio does not overemphasize one or more asset categories, and you'll return your portfolio to a comfortable level of risk.

To correct this imbalance, you need to sell some shares of the funds that have done well and buy more shares of the funds that have done poorly. It won't be easy; the temptation is to do just the opposite. But that would mean buying high and selling low — violating the golden rule of investing.

Your Lincoln Investment financial representative can help you make the hard decisions to buy low and sell high, and introduce you to our asset management services, where you can choose to invest with leading advisors who will handle your asset allocation and rebalancing needs automatically.