Your Finance: Positioning investments for '13

Using data from millions of 401(k) participants and

Using data from millions of 401(k) participants and incorporating factors like longevity, investment risk and the potential for catastrophic health care costs, the institute crunched the numbers and determined that working five years beyond the "normal" retirement age of 65 may not be enough for many Americans to retire comfortably. Photo Credit: iStock

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These are strange times to be moving your money around. Everyone is in "wait and see" mode while President Obama and House Speaker John Boehner talk, and investors have more questions than answers about the economy, interest rates, Europe, consumer behavior, corporate earnings and everything else that might rock their investment boats in the months to come.

Yet, this is the time to position 401(k)s, retirement accounts and investment portfolios for 2013. It's the last year before health care reform gets fully phased in. It's the last full year for which the Federal Reserve has promised to keep holding interest rates at or near historic lows.

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Here's how to interpret all of this in a way that can make you money, or protect it from forces that could cause your precious dollars to disappear.

Plan for the first part of the year, not for the whole year. Think of it as divided into two sections: The six months from Nov. 1 to April 30 tend to be stock market winners, with an average gain of 7.5 percent dating back to 1950, according to The Stock Traders Almanac. The other six-month period? Not so good, with an average gain of 0.3 percent. It's not unreasonable to expect your gains to come at the beginning and the end of the year, so you may want to revisit everything in April.

Position for the rate rise to come. "We believe the 30-year decline in Treasury yields has run its course," writes UBS in its year-ahead investment strategy paper. "Bonds have been transformed into a less attractive, and in many ways riskier, asset class." Of course, bond experts have lost money betting against Treasury bonds too early. Still, it makes sense to watch for early signs of inflation and rising interest rates. If and when they hit, they could hurt bond prices and bond investors for years to come. As for 2013, UBS is telling its clients to look at high-yield and other corporate bonds, as well as emerging-markets corporate bonds to squeeze more yield out of that side of their portfolios.

Stocks may have room to grow. Despite the relatively weak economic expansion and often lackluster stock market performance in the first year of a president's second term, many advisory firms are predicting good things for equities in 2013. "Stocks are historically cheap relative to bonds," says MFS in its year-end investment outlook. There's also some evidence they are still cheap relative to themselves. The Standard & Poor's 500 is currently trading at 13.9 percent of earnings; that's roughly a 20 percent discount to its typical 17.1 percent price/earnings ratio.

Watch the next three weeks carefully. Stock traders seem to already expect a "fiscal cliff"-averting deal in Washington, but when it comes, the market should move up more, suggests Sam Stovall, chief equity strategist for S&P Capital IQ. If that deal doesn't come, however, and the market sells off, it could be a warning sign for next year. "Since 1900, whenever the S&P 500 was up for the full year, yet ended on a down note in December, the '500' posted an average return of minus 6.2 percent in the following year and fell more times than it rose," he said. So far this year, the S&P 500 is up 13.54 percent.

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