First , I receive no endorsements or payments of any kind from FinancialEngines.com or the Motley Fool.  I am a customer of theirs, and have been one for a number of years.

I am one to believe that any one of us can make the same or better decisions about investing our money than any broker.  The key is having the necessary tools at our disposal.

A few years ago, my brother-in-law worked for Financial Engines.  He was able to provide this product to the State of Florida to ensure that state employees would have the best decision tools to select the optimal funds for their 401K based on age, investment, and personal risk tolerance.  As an aside, he said I should try it out on a personal level.  I have never been more at ease about my choices in any of my pre-tax, and after tax investing based on the advice I received from Financial Engines.

Financial Engines was founded in 1996 by Nobel Prize winner Dr. William F. Sharpe with the goal of offering individuals the same sophisticated retirement investing help previously only available to large institutions.  Simply speaking, Dr. Sharpe developed a system of evaluating funds to determine how they would work for you based on criteria relevant to you.

For example, I started using Financial Engines in my late 30’s.  I provided the tool several pieces of information that allowed it to determine a recommended course of action.  The data I enetered was as follows:
• Age
• My retirement goal (total amount and relevant yearly income from my investments)
• Risk – Safer lower yield investing vs. riskier higher yield investing
• Contributions – how much I realistically contribute per year
• Investment funds available to you from your 401K or other investment tools like E*Trade

Once that data is entered, along with expected social security (I entered zero) and pensions, it will take the total amount you say you will be contributing to buying funds your 401K, IRA, and even brokerage account. 

My personal philosophy and use of the tool is to set a fairly decent goal (the equivalent of $150K in yearly income when I retire) and set my sites on a 50% achievement, meaning that based on all the criteria I provided my fund selections an average performance in the market will allow me to reach that goal.  If the market performs well, there is a chance my income would be in the $250K range, and if the market does poorly, the $90K range. Because of the recent market turmoil, my average projected income is in the $130K-$140K range.  I can either reagdjust my risk, increase my contributions, or lower my expectations.

As I enter into my 50s, I will reassess my goals as well as my risk.  My optimism along with historical data allows me to believe that from 2010 to 2020, I will have a decent decade to continue to invest.  We still make sacrifices to invest the maximum allowable amount possible in my 401K, Roth IRA, and my wife’s IRA. Right now in 2009 that equates to $27,500 a year.  We don’t live lavishly, our cars are paid for, and we have no credit card debt.

For any brokerage investments, I pay $99 a year to receive a monthly research analysis newsletter from The Motley Fool. Founded by David and Tom Gardner in 1993, they have been putting out sound research advice that has allowed me to purchase particular stocks with confidence. You can get a view of what the Motley fool has to offer at http://fool.franklinomics.com/. Occasionally, I also take a peek to see what Warren Buffett is buying.  For example, when he recently took interest in Constellation Energy, I added that stock to my portfolio as well.

One thing in common between Financial Engines, the Motley Fool, and warren Buffet is that they all focus on the long term.  How you manage your money is of course, your business.  In the economic downturn of 2009, I have moved none of my investments, and in fact continue to purchase more.  My definition of wealth is simple: To have my income greater than my expenditures throughout my entire life.  I do not want to worry, as author Douglas Adams once wrote, “about the movement of little green pieces of paper”. Rather I want to focus my time on my wife, children, friends – the more important things in my life.