7 New Year’s Resolutions for Investors
The new year is a perfect opportunity to take stock in your investments, review your finances, and make sure your money is working for you in the year to come. If you want to whip your investments into shape, follow these seven New Year’s resolutions for investors.
Contribute Over 10 Percent to Retirement Funds
Experts generally suggest that you should save at least 10 percent to 15 percent of your gross pay to maintain the same lifestyle in retirement. Regardless of the state of your retirement accounts today, you should make sure you are doing the right things going forward. That means increasing your 401(k) or other retirement contributions to that 10 percent minimum, if not more.
At the bare minimum, you should be sure to save at least enough to get your full employer match. But that is usually not enough if you want to keep the same standard of living in your golden years.
Lower Mutual Fund Fees
Even the most seasoned investors can’t avoid all fees, but you can make some small changes to your portfolio that may save you thousands of dollars over the years, if not more. You may not have many options to invest in your 401(k) account, but an IRA or other investment accounts outside of your employer should give you access to virtually every mutual fund and ETF in existence.
Review your current mutual fund and ETF fees, and compare to similar funds at Vanguard, Charles Schwab, Fidelity, and other mutual fund families. If you can move your dollars to a comparable fund with less fees, that should keep more dollars in your investment account instead of Wall Street fund manager’s pockets.
Create an Asset Allocation Plan and Stick to It
Your investments should include a diverse array of stocks, bonds, and funds (or funds that include stocks and bonds) that match your risk tolerance and long-term investment goals. If that isn’t the case, it’s time to create the best asset allocation plan for your needs.
Your asset allocation should be a roadmap to a rough percentage of stocks, bonds, and other assets in your portfolio. This can be by account or a holistic plan across all accounts. Whatever you do, don’t ignore your asset allocation or you could be in for a big, unpleasant surprise someday in the future.
Read an Investment Book
Warren Buffett spends much of his day reading, to be exact. While you don’t have to read the same 600 to 1,000 pages per day as Warren Buffett, it is a good idea to round out your investment knowledge with a new book at least once per year. Here are a few top choices to level up your investment IQ:
- The Intelligent Investor—Benjamin Graham
- A Random Walk Down Wall Street—Burton Malkiel
- The Automatic Millionaire—David Bach
- I Will Teach You to Be Rich—Ramit Sethi
Consolidate Old Accounts
Bank and investment accounts don’t impact your credit score, and there is no benefit in keeping old accounts open. They just add to mental clutter, document clutter, and an excess of statements and 1099s at tax time.
For old retirement accounts like 401(k) accounts at old employers, a 401(k) rollover helps you consolidate, get new investment options, and lower your fees. When it comes to bank and investment accounts, the fewer the better in most cases, as long as you won’t pay more or lose out on tax benefits.
Learn a New Alternate Investment
2017 was the breakout year for Bitcoin and other cryptocurrencies, but they are far from the only alternative investment. If you don’t have the appetite for something quite so volatile, you are not alone. But that doesn’t mean your portfolio should be without any alternatives.
Some popular alternatives include real estate, commodities, peer-to-peer lending, master limited partnerships, and more. Pick one to learn about this year. Whether or not you decide it is a good fit for your portfolio, it is never bad to know more about investments.
Double Down on Security
Like other recent years, 2017 left millions of Americans’ personal information out in the public thanks to large breaches and security hacks. This year’s big story was Equifax, which leaked personal credit information of 143 million Americans including everything needed for identity theft.
If you have not already, turn on two-factor authentication on any possible account, particularly your . Try out a password manager so you have a unique, random password at every website you use. Finally, switch from paper to electronic statements to avoid possible mail theft and a need to drop files in the shred bin.
Put Your Finances First in 2019 and Beyond
While your resolution to go to the gym every day may fall flat, these resolutions do not require long-term commitments. If you can pick one per week, in less than two months your investments will be in great shape for the new year. If you can compress them and knock them out sooner, or need a little more time, that’s fine too. Whatever you do, don’t ignore your investments. Make an action plan and improve your investments each year. Your future self will thank you.