Broker Check

Boca Raton Office

1001 W. Yamato Rd

Suite 306
Boca Raton, FL 33431

3 New Year's Investing Resolutions

Winter 2015 Edition

Rather than complain that you overspent during the holidays, failed to max out your 401(k) in 2014, or stuck with a too-conservative investment mix longer than you should have, it’s never too late to look forward and enact positive change.

Here are three personal finance and investing resolutions.  You needn’t put all three into place at the onset of the year, but they’re worthy goals to implement any time.

Resolution 1: Kick up your savings rate

Do you have concrete goals that you’ve taken the time to prioritize and quantify? And does your savings rate put you on track to reach those goals, even if you don’t get too much of a helping hand from your investments?  By simply giving due attention to those tasks, you can make a bigger impact on the success of your plan than smaller decisions like whether to invest in index funds or ETFs. An investor who is able to save an extra $100 a month for 40 years can have an additional $90,000 in retirement, even if she earns a skimpy 3% on her money over that stretch. 

Resolution 2: Watch expenses and taxes like a hawk 

Although the lowest-cost investments won’t always outperform expensive ones, Morningstar’s studies have repeatedly demonstrated that the cheapest funds generally outperform higher-cost products over longer periods of time.  In addition, keep an eye on any administrative costs you’ve incurred to participate in your company’s retirement plan.  Also, are you paying any transactional costs to buy and sell securities?  These commissions, even though seemingly innocuous in absolute terms, can cut into your returns, too.

Good tax management can go a long way toward enhancing your return.  Focus on diversifying not just your asset allocation, but your tax registrations across all accounts too.  Optimize your tax-deferred investment opportunities by enrolling in your company’s retirement plan. In addition, consider funding a Roth IRA, if eligible, or investment-related cash value life insurance in order to build tax-free income to balance other taxable distributions in retirement.
Resolution 3:  Make an investment policy statement- and stick to it

This simple document outlines your portfolio plan, including your investment goals, your savings rate, your approximate stock/bond/cash mix, and the parameters you’ll use to monitor your holdings on an ongoing basis.  By committing your investment plan to writing, you’re less likely to react to short-term economic or markets news that could prove little to your returns in the long-run.  We can help you prepare such a statement as part of an overall comprehensive financial plan.

Any tax advice contained herein is of a general nature. Further, you should seek specific tax advice from your tax professional before pursuing any idea contemplated herein. This advice is being provided solely as an incidental service to our business as a financial planner.