For The State Journal

As the recession ebbs, workers are surveying the investment waters. Centra Bank has developed five tips that it hopes will be points of light for investors cautiously watching Wall Street and their nest eggs.

“The most common question is ‘What do we do?’ ” said John Fahey, Centra’s senior vice president and spokesman from the bank’s Morgantown headquarters. “We at the bank sat down — there was 250 years of experience at the senior management level in the room — and from our collective expertise, came up with what to tell people on their investments.”

The tips complement what William W. Carter of McKinley Carter Wealth Services in Charleston advises, which is that investors evaluate their lifestyles and their current savings while trying to repair their nest eggs.

Centra’s five investment tips are:

1. Do the research.

A person can become a better investor by doing his or her homework and becoming familiar with investment terms, theories and numbers. Doing solid research into an investment makes a person more confident in his or her investment and can calm fears.

2. Look to the long term.

Look for long-term value in an investment and stay clear of “get rich quick” investment opportunities. With careful planning and long term holding, a person may minimize the taxes paid on any gains made on investments. Consult a tax advisor to maximize savings.

3. Diversify. Diversify. Diversify.

Reasonably diversifying an investment portfolio eliminates some of the “turbulence” and makes for more consistent returns in an investment portfolio. It’s a great way to reduce risk and the possibility of losing money.

Carter says the most important question to ask is “Do I have the right ratio of stocks to bonds?”

“You’re going to have more growth probably with stocks but you’re certainly going to have more volatility,” he said. Fahey said how investors split their money between stocks and bonds depends on age and when they choose to discontinue earning wages.

“The younger you are, you want more stocks and equities,” he said. “As you age, you want to creep that up to income-earning bonds, U.S. government bonds, CDs, things that stay pretty level while having the ability to shoot off income.

“Maybe a person in their 20s would have 90 percent of their investments in stocks and 10 percent in bonds. After age 55, you’d be 90-10 the other way. You run toward safety the older you get because you want a predictable retirement.”

That leads to the second question Carter prompts investors to ask: “If they keep saving the current amount they’re saving, what quality of life are they reasonably able to pay for in retirement? Is that acceptable to them?”

He said “If not, then they need to spend less or make more so they’ll have more to add to savings.”

4. Use extra money to invest.

People should estimate their living expenses and set that money aside. Any and all disposable income should be set aside for investing. As people mature as investors, they can start using more money from personal savings to invest.

5. Set investment goals. Create a plan. Stick to the plan.

People should determine what kind of money they realistically expect to earn from their investments. Different people have different reasons to invest, such as retirement, college or to leave a legacy for family members? The knowledge of where a person wants to end up with his or her personal finances makes it easier to choose the right type of investment and the way to go about it. Once a plan is in place, stick to it and review it periodically to ensure it is on track.

Carter, whose firm makes lots of referrals, encourages investors to seek the right kind of help when planning.

“Even though I work with very talented and accomplished professionals and executives, I’ve learned that most can benefit substantially from expert help in managing their personal financial affairs,” he said.

Carter said key considerations in picking an adviser are “how do they get paid, what’s the total cost of the program, how much authority they have to act on the client’s behalf and how narrow or broad their expertise is.”