Are Your Eggs In The Right Basket?

Now that you are contributing to your retirement plan, you need to make the next decision – where to invest your money. Did someone say "diversification" or "allocation"? While these two terms are often interchanged in discussions of retirement investment, they are distinct.

Asset "diversification" is defined as spreading assets among different types of securities (e.g., stocks, bonds) to reduce risk associated with any one investment. Having a variety of securities, reduces risk, so that a decline in one security does not overly adversely impact your portfolio.

Asset "allocation," on the other hand, refers to distributing funds among several asset classes (i.e., collection of securities with similar characteristics) to create a less volatile portfolio.

Mutual funds do a tremendous job of diversification because they typically own stock in 50 to 500 companies. However, the companies inside each mutual fund often share many of the same characteristics. For example, the descriptions of mutual funds (e.g., large cap, small cap, international) indicate what sizes or types of companies are owned by the fund. A large cap (capitalization) mutual fund would primarily own companies that are valued above $5 billion. The investment industry calls these descriptions asset classes. Owning just one mutual fund can provide a great deal of diversification but may not satisfy your need for diverse asset allocation.

The degree of asset allocation appropriate to you is determined by balancing your fear of losing principle against your desire for high returns; this is referred to as risk vs. reward. An aggressive portfolio achieves high returns (high reward) with minimum consideration given to the loss of principle (high risk). This portfolio increases risks by reducing its ownership of bonds and cash, for example, which are more reliable (i.e., less volatile) than stocks. A moderate portfolio attempts to strike a balance between risk and reward by including more bonds and cash, and fewer stocks. A conservative portfolio minimizes risk in order to provide a more consistent (though not guaranteed) rate of return. A consistent rate of return is usually a lower rate of return.

ACEC firms nationwide are invited to hear an insider’s perspective from agencies and funding sources that can support expansion of their business overseas. A wealth of government resources exists to support U.S. firms in the global marketplace. This two-day conference, June 5-6, in Washington, DC, will help firms learn about the federal agencies and meet the players that can help them succeed internationally. During this conference participants will be able to gain a comprehensive overview of the relevant federal agencies and programs and meet the people to help access them; network with colleagues from large and small firms around the United States that are active or interested in the global marketplace; and get to know ACEC’s International Program and how it can help their business. Contact ACEC’s Ken Puvak (kpuvak@acec.org) or visit our International Program website (www.intl.acec.org) for details.

ACEC & CEC/Louisiana are sponsoring a joint seminar, opened to all members, on "E-commerce in the Engineering Office." The seminar will take place at the Kings Mill Resort in Williamsburg, VA on June 23, 2000. This is a timely area of interest since most companies are exploring ways to incorporate e-commerce in their operations. E-commerce holds great promise for business and industry and consulting engineers. The seminar will be lead by Michael DeBacker, Technology Manager for HNTB Technology Group. He posses a thorough understanding of web-sites, e-commerce, multimedia and video use on the Internet, as well as Geographical Information Systems (GIS) and how these technologies can be applied to architecture and engineering industries. Prior to joining HNTB’s Technology Group, DeBacker worked as a project manager in the firm’s transportation planning and environmental practices division. For further information, contact David Stelly, at Pose Associates Limited, Lafayette, LA, at 337-237-6517 or pocheld@iamerica.net or Nancy Mosely (nmosely@acec.org) at ACEC.

Design firms increasingly are engaged in projects from the point of conception to the final stage of completion—from the concept in the computer to the structure in the field. Engineering designers want to participate in the physical creation of the firm’s vision and plans. And it can be profitable, too! A new book shows designers how they can also be constructors. Building Profits in the Construction Industry, by Michael T. Kubal, Kevin T. Miller, and Ronald D. Worth, was written from practical experience. The authors analyze project management, marketing strategies, delivery systems, and discuss relevant trends. Detailed practical information on technologies, marketing plans, pre-construction plans, marketing communications, and strategic alliances is provided. The book contains forms, sample letters, and a searchable CD-ROM. This overview of the construction industry applies just as much to the engineering industry. Published by McGraw-Hill, we call this must reading. 421pp, 2000. #L2886, $60, $6 shipping. Order from ACEC via FAX 202-789-7220 or e-mail, with Visa, Mastercard, American Express, expiration date, contact name, street address.