Investment Funds

It may seem unfair that so much of your time is spent working instead of "playing," but you do have something to look forward to…your future retirement. If all goes well, the many years of hard work will finally start paying off and, when you retire, you'll have all the time in the world to relax and have fun. Since big plans usually require secure finances, it's important to know exactly how your investments can earn money for you.

You're probably no stranger to the term "total return." That's the bottom line and what most investors look for when deciding if an investment fund is doing its job. Total return is made up of three components which can generate a profit or loss for an investment fund:

1. Share Appreciation/Depreciation--the increase or decrease in the market value of the fund's shares.
2. Capital Gains--the profits earned from the sale of investments in the fund's portfolio.
3. Income--any interest or dividends earned by the investments in the fund's portfolio.

What should you do when an investment fund isn't making money for you? Don't lose faith immediately. Since other factors, like market volatility or rising interest rates, can hurt a fund's performance, you can't rely on total return to tell the whole story.

If you're having second thoughts about a fund, try comparing it to funds with similar objectives. Be aware of factors that can cause performance to vary from one fund to the next, such as expenses or the types of securities in each fund's portfolio. Suppose your blue chip stock fund hasn't had a very good year, but performed about the same or better than other blue chip stock funds or the S&P 500 Index (an index of 500 widely held stocks of large companies). In this case, your fund's so-so performance may be due to market volatility rather than poor management and you probably should hang on to it.

Sure, you want your investments to make money for you. But the road to your retirement goals is long and, in addition to good performance, you need the reliability and endurance of quality investments to get you there.

ENB Associates Inc. is a wholly owned subsidiary of Evans National Bank. Securities are offered by O'Keefe Shaw & Co., Inc. Member NASD, and SIPC. Products purchased through O'Keefe Shaw may lose value, are not deposits with obligations of, or guaranteed by Evans National Bank or affiliates and are not insured by the FDIC.