Investment advisors who spoke with The Royal Gazette said the value of pension funds may be depressed, but they are certain to rebound and investors would be foolish not to be invested when they do. The key to being able to sleep at night and not worry about your pension is to realise that it is a long-term investment.

Anne Kast, president of Kast Investment Management which oversees about 600 pensions for Argus said market volatility had definitely caused investors to change their risk profiles to more conservative, especially those closer to retirement.

Mrs. Kast said the performance of any particular pension fund will depend on how it is invested, but said: "The markets themselves have given up five years of growth since the beginning of the bear market in March 2000."

She said this was when the technology bubble burst and the markets have since experienced a long decline, characterised by extreme volatility.

Mrs. Kast said following a nice rebound after September 11 the markets were moving along just fine until corporate corruption scandals such as Enron jolted investor confidence and dragged everything back. "In May, June and July there had been seven straight weeks of down markets," said Mrs. Kast.

However, every dark cloud has a silver lining and Mrs. Kast said the downtrodden market would likely provide a much stronger base from which to work: "We will have corporate earnings we can believe, we will have values more realistic and from there the confidence will return."

Mrs. Kast said she believed there was a great deal of cash waiting to move into the market but there was currently no incentive to invest in the market.

Mrs. Kast added: "The benefit of pension money is that people have been picking up these investments cheaply.

"If you look back at the crash of `87 the people who sold out at that point lost a lot of money, and never made it back, the people who stayed put made their money back fairly quickly, and the people who bought, did very well." However, Mrs. Kast said it was a tough decision to make that call.

"I think confidence will be restored... but as it grinds its way through the system it is a very stressful tedious process."

As far as advice for pension plan holders Mrs. Kast said people needed to review where they were in terms of years from retirement and lifestyle demands.

To ascertain this, Mrs. Kast said pension holders could ask their human resources representative to take a questionnaire that helps determine goals, objectives, time span and risk profile. "Changes can be made," said Mrs. Kast.

For example, pension holders can opt for an aggressive investment profile with 70 percent equities or a more conservative profile with 70 percent fixed income. However, Mrs. Kast advises: "It is really a life changing event that should trigger the change as opposed to a panic."

Mrs. Kast also said investors should be very careful not to make a bad situation worse. "When this market turns, pension money wants to be there... and that is when most of the money gets made. If somebody has gone from a balanced portfolio to cash, they are going to miss out on that and sit with their losses, and I do have confidence that the system is going to survive this. There are enough fundamental good things in place that its going to be able to withstand the shocks. It would be nice if there were not another 9/11. What we learn from this is anything can happen."

Further news to alleviate investors' stress, Mrs. Kast added: "A lot of the bad news or anticipated bad news has been priced into this market. A lot of that is there now. And less bad news will be a good thing. How much good news we are going to get from here we don't know," but Mrs. Kast thought less bad news would help the markets recover.

When will the markets take a positive turn? Mrs. Kast said: "Clearly I think we are on the far side of this bad market and we are getting good earnings reports that the market is ignoring. There is global growth, the market is ignoring that. Those are two very powerful market drivers. And so when sentiment changes, there are some good things in place."

Mrs. Kast also mentioned the new requirement by the US Securities and Exchange Commission (SEC) that by August 15, the CEOs and CFOs of the top 1,000 publicly traded companies had to sign a statement attesting to the accuracy of their financial statements.

She said it will be interesting to see how the new requirement panned out, and that it would hopefully restore some of the confidence in the markets.

The Royal Gazette investment columnist Martha Myron said people tend to invest emotionally and quoted investment guru Peter Lynch who said: "If you look at the last 40 years, the stock market increased 40 fold, and company earnings increased 40 fold." Mr. Lynch's recommendation for investors: "Stay the course." Ms Myron said pension holders need to asses what their short and long term needs were and to remember that a pension is a long-term investment and people shouldn't look at their pension's performance every day.

"What I have seen is that people tend to invest emotionally. In some cases, with the pension scheme here being so new, a lot of people thought they were aggressive investors, and they have found out that they are not."

Ms Myron said if people were really concerned about their pension, they need to sit down with whoever the pension administrator is and go over their financial profile again and maybe make some adjustments. This can be done with a questionnaire, but Ms Myron said once a strategy had been chosen, stick with it.

Ms Myron also said people forget that a pension should only be part of a person's financial plan for retirement.

Other investments could include personal savings, property and so on. Ms Myron said: "If you had a decent diversified portfolio - and a pension scheme is a diversified portfolio - if you had that before September 11, most of them were back to par by the end of December. We had all lost a little, 5 or 10 percent as it has been a very bad bear market, but it still came back up. Now we are having a lot more volatility and people are saying `I can't stand this.' An awful lot of people are succumbing to emotion and selling out. They are just not giving those funds enough time."

Ms Myron said the recent market volatility had been difficult for Bermudians to stomach and pointed out that many people who were starting out with pensions had never invested in the market before. "But all of a sudden their money is going into the market and instead of seeing it grow, they are looking at it down 20 percent. It has been very difficult."

Offering some cautionary advice, Ms Myron said: "Don't make any sudden moves, Do not give into emotion and sell it all. There is a famous statistic out there, that says if you were fully invested in the market for the last ten years, your return would have been somewhere around 11 percent, and if you got out of the market for ten of those days, it would be down to six percent, and if you got out of the market for 20 of those days, it would have been down to two percent, and if you pulled out for a month and then started to get back in, you would have had a negative return."

Ms Myron said that during that ten year time frame the biggest gains were made in something like 45 days, but trying to time the market was almost impossible.

"So when you try to time the market and say well I'm getting out now and I will get back in later, you will lose out every single time," said Ms Myron.

She also said another common investing pitfall was to follow the herd and chase investments, usually when it is too late. She gave the example of gold and said that even though the precious metal may appreciate a little more, "if you were going to be invested in gold funds, you should have been invested in them a year ago."

Ms Myron said that the key to successful investing was diversification. And the most important thing to keep in mind according to both Mrs. Kast and Ms Myron was summed up by Mrs. Kast: "There is always risk. It is how you manage it and how much you take."