It is the end of another year. Have you been financially successful in 2006 in the quest to achieve your financial goals? We are all one-step closer to retirement, whether that day is next year, five years, or 20 years away. Typically, most of us would rather not admit to reflection, rumination, and roles or goals of renewal, but we all succumb to thoughts such as these:

[bul] This year I will get my act together, in more ways than one.

[bul] I will take charge of my finances.

[bul] I will become more disciplined in savings and less exuberant about spending on depreciating goodies.

[bul] I will become more financially literate.

In the vein of learning more about your own finances, perhaps you should consider a term of doing-it-yourself. After all, a recent study (“Assessing the Costs and Benefits of Brokers in the Mutual Fund Industry” by Bergstresser, Chalmers and Tufano) points out that do-it-yourselfers can outperform financial advisors when it comes to picking mutual funds. But, and this is a big but, taking on this task means that you have to commit to understanding investments and what choices are right for you! Of course, this also implies that I still have credibility as a financial solutions provider even if you do undertake the do-it-yourself investing method.

While this study appears to give very short shrift to all advisors, read comments on another poll:

“Half of GenX investors, 46 percent of Boomers and 45 percent of Matures believe they ‘need the help of professionals’, up roughly 10 percent from 2004.

“According to the survey from MainStay Investments division of New York Life Investment Management LLC, investors also acknowledge the need for more comprehensive financial planning while admitting they ‘don’t have enough time/financial knowledge to make prudent investment decisions’. Among investors who do not currently have a financial plan, 56 percent of GenXers and 39 percent of Boomers expect to need one in the future, up from 50 percent and 35 percent respectively in 2004.

“‘Not having enough discretionary income’ is the most frequently cited reason for not saving or investing more, said 50 percent of all survey respondents. A significant percentage of investors also procrastinate and lack confidence in their financial abilities.”

So, DIY’s several easy web sites that will not inundate you with information: www.smartmoney.com, www.investopedia.com, and www.thefool.com are good places to start. You want to feel encouraged to learn, not have the constant anxiety that comes from having far too much homework every night after work.

Once you feel comfortable with some of the more basic concepts, you might try your hand at one of the online trading services such as www.investingonline.org.

These web sites allow you to practise simulated trading, but be forewarned, most of them also promote the use of accounts that allow you to purchase investments on margin (leverage). The use of margins or leverage to accelerate your profits — and your losses — is never a good idea for a beginning investor.

Essentially, you are contracting for a loan with the brokerage firm; this loan is secured by the value of your underlying stock positions, for instance. If the stock value heads south, you will be subject to a margin call and will be expected to remit any difference in cash to the firm.

There are more than 15 million web sites for the do-it-yourself investor — some generic, some tedious, some cumbersome. I don’t have a web site, but here are some common-sense (and experience culled from many years of working with clients) dos and don’ts to get you going.

1. Compute your real rate of return and watch your fees. Broker commissions, turnover costs, mutual fund fees, back-end loads all take a chunk out of your actual profit. Do not delude yourself, do the maths and get the real net rate of return.

2. Set a profit, loss and time limit on each position. Some investors decide on a time line based upon the 200-day S&P moving average. If your position is net after costs 20 percent above that recent line in three months — sell! After all, that is an annualised return of 80 percent per year.

3. Do not give in to greed by coveting huge gains. Just because one stock is doing well, this does not mean you should buy more — suddenly you may find all your cash tied up in four stocks. Now that’s an emotional roller-coaster.

4. Do not start loving any stock. If it rises in value and it’s time to sell according to your formula, sell it. If it drops in value, do not hold on, hoping and hoping. Sell it and move on.

5. Buy small positions, say 1,000 per. If one stock performs really well, and you do like it, sell off all the profit, back to your original position.

6. Do enough research on each position to understand how it reacts in volatile markets. www.smartmoney.com has a great tool called “Map of the Market”, which shows hues from dark green to red, with bright red indicating more volatility and price swings in a stock. You can also use yahoo! finance and set up a five-year chart for any stock that will demonstrate quite vividly historical price swings.

7. Buy equities you know, “Learn to Earn”, as Peter Lynch says. Chasing unknown penny-stocks and other short-term plays is not for the timid, the beginner, or the budget minded.

8. Do not be tempted by web site and media ads to trade currency, options, and other “get-rich-quick” enticements.

9. Pay attention — at least once a week or more. Consider joining an alert type service (or uploading it yourself) that will notify you if your positions are changing. Beware of implementing trades during your workday — this type of activity is not condoned in today’s employment arena.

10. It is always wise to remember that investing is a Zero-sum game. For every gainer, someone is a loser. You won’t win all the time, but you want to land on the winning side on a consistent basis.

11. Never believe your friends, or anyone else about how spectacularly successful they have been. No one wants to admit to a loss — and if they do, you know it was a zinger.

Now, after reading this, if you feel exhausted or that you’d rather garden or plan your next trip, you know that your homework has a different tilt. Rather than researching good stocks to buy, you should focus on establishing a relationship with an objective licensed experienced investment professional. Not all of us can or want to do it ourselves.

Happy New Year and much success in 2007!Martha Myron CPA CFP|0xae| is a Sr. Relationship Manager at Argus Financial Limited. She specialises in planning and investment advisory services for clients considering lifestyle transitions and rewarding retirements. Send confidential email to marthamyron[AT]northrock.bm or 294-5709.

The article expresses the opinion of the author alone. Under no circumstances is the content of this article to be taken as specific investment advice.