Strategies for growing your retirement dollars are the same for dairy producers as they are for other independent business operators. Consider the following tips:

1. Develop a good source of investment advice and information. Investing is not an art; it is a science born of considerable research and historical trends analyzed over a long period of time. The brokerage firms that do their homework consistently have the best long-term performance records.

2. Determine your risk tolerance. Only when you identify how comfortable you are with taking investment risks, can you make smart, informed decisions about your portfolio.

The article, “Take this risk quiz,” on page 78 of this month’s issue will give you a place to start. Talk to your financial adviser to help you find investments that match your risk personality.

3. Diversify your holdings. Dairy producers are often tempted to re-invest in their dairy operations, but that’s not always wise. By diversifying your assets among several types of investments, rather than just one or two, you reduce your risk.

4. Set reasonable expectations for the return on your investments. An investment may earn 10 percent to 12 percent a year, but that’s not always possible. Beware of claims that promise returns of 20 percent or more on a long-term basis.

5. Invest in quality securities. Just as quality feeds produce quality milk, you should stay with solid companies that have stood the test of time. These companies generally do well during periods of market strength, and recover more quickly after periods of market weakness.

6. Never let a low price per share be your only reason for buying a particular stock. The one or two low-priced stocks that jumped 40 percent in a year are overwhelming exceptions.

7. Before investing, designate funds for short-term or long-term use. Don’t invest money you need to keep liquid; otherwise, you may be forced to sell out of an interim dip in the market. Most financial advisers recommend keeping three to six months of your monthly income in an easily-accessible savings or money market account to take care of unforeseen expenses or family emergencies. Remember, investing is a long-term process. Real money is made over years, not months.

8. Allow dividends to compound over time. The income you earn from stock dividends can add up to enormous profits over the years. Brokerage firms often offer free dividend reinvestment programs that use a company’s dividends to purchase more shares of the underlying stocks. Ask your financial consultant about how you can participate.

9. Learn all you can about the companies in which you invest. Read the annual reports and earnings summaries that you should receive as a stockholder. And, ask your financial consultant about current company research.

10. Live within your means. Studies show that Americans save less and less — and spend more. Keep your spending habits within the limits of your income, not your savings account. And, invest wisely for the future by maximizing your retirement plan at work.

David Chlus is a first vice president of investments with Smith Barney, Inc., in Utica, N.Y. and partner in a 90-cow dairy.