Investing for retirement is a lot like vacation planning: the more carefully you choose your strategies, the more comfortable you expect to be when you retire. And, like vacation planning, you need to avoid investing trapsthat can snare your savings.

Watch the Store To reach your goals, monitor your investments. Correct mistakes quickly.A frequent error investors make is to carefully design their retirement investment strategy and then expect it to perform on automatic pilot. Lookat your account regularly to be sure your investments are performing as you anticipated. If, over a reasonable time, your investments don’t meetyour needs, make any necessary changes.

Don’t Overdo It You’re investing for retirement and that’s a long-term proposition. Don’tworry about daily market gyrations. If you sell every time an investmentdeclines slightly, you’ll not only forego some good opportunities for capital appreciation, but you’ll also never have a restful moment. Bymatching your mutual fund’s performance against that of similar funds and appropriate benchmarks, you’ll be better equipped to spot a trend that’s not just a flash in the pan. A quarterly check can tell you whether yourfund is under-performing or keeping up with its peers and relative benchmarks.

Don’t Be Too Conservative If you invest all of your money in a money market or similar fund, your risk may decrease but so will your return potential. Investing in fundsthat seek to preserve your principal means that your return probably won’t do much more than keep up with the current inflation rate. To have enoughmoney for a comfortable retirement, you need some investments that offer long-term growth potential.

Diversifying your investments among different asset classes can help to reduce your risk. When you diversify, you put some of your money inconservative investments such as market market funds or even corporate or government bonds and the rest in investments that seek higher returns although typically at a higher level of risk. If your retirement is still along way off, you can afford to take on riskier investments, such as growth stocks, that offer the potential for high returns. Even ifretirement is just around the corner, some higher risk investments that offer the opportunity for capital appreciation may well be appropriate for your account.

Diversification also means that your investments may be less affected by market peaks and valleys. While one investment class may fall sharply,another may go up at the same time.

Don’t Make Unnecessary Withdrawals In a financial crunch, you may be tempted to take money out of your retirement account. But, if you take an early withdrawal, you may besubject to a penalty as well as income tax at your current ordinary income tax rate. Just remember that any money you withdraw from your accountis not being invested for your future. Bottom line: Leave your moneyinvested until you retire.

For more information on avoiding investment traps, consult your financial advisor today.

(Alan Moore is a financial advisor of Legg Mason Wood Walker, Inc., adiversified securities brokerage and financial services firm that is a member of the New York Stock Exchange, Inc. and SIPC.)

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