With the New Year come ambitious New Year’s resolutions – changes that we resolve to undertake, in order to improve our life. We also get reminded of past resolutions that we did not stick to. One of the most significant changes that we can make in our lives is having a resolution to do better financially. If your last year’s financial resolutions came through and you did manage to increase your wealth, keep doing the good work and keep growing your money. If you did not reach your goals, give it another try this year. Rather than despair and give up, let’s look at things that might have gone wrong:
Do you save enough?
Take some time to review your finances and set new saving goals that are realistic and achievable. Get into the habit of saving even a small amount each month. In the long run, small amounts will matter and add to your capital. Save before you spend! Rather then spending your money unplanned and saving whatever is rest at the end of the month, set aside the saving amount before spending any money.
What do you do with your savings?
Is your money just collecting the dust in your bank account? Is your cash earning enough interest? Once you get your basic savings and emergency fund in place, start investing that extra money. Create a plan that will help you stay disciplined and dedicated. Review your plan occasionally and adjust if needed.
Are you doing it all by yourself?
Have you spoken to a financial advisor yet? A financial advisor can help you decide what type of investment strategy would work best for your specific circumstances and your short-, medium-, or long-term goals. A fiduciary financial advisor will put your interest first and will help you find the right solution based on your needs and your current ability.
Are you already investing but your portfolio is not performing well?
It would be recommended to look into your asset allocation and whether they are aligned with your objectives. In other words, you need to review the distribution of your assets among stocks, bonds, funds etc. in connection to your current age, income, risk tolerance and your needs and goals. A professional wealth manager can make a real difference in choosing the right asset allocation strategy.
Is your portfolio diversified?
Once you know that you’ve got the right asset allocation, it’s time to look into diversification. While asset allocation takes an overall view of the different types of assets in your portfolio, diversification reflects the number of each of those assets. It involves assets distribution within and throughout asset classes and different sectors. The concentration of these assets is a critical factor in helping you reach your goals and reduce risks. The use of the right technology can help you improve your portfolio performance. Since asset allocation and diversification strategies are implemented hand-in-hand to achieve the best results, having a financial advisor in combination with the right technology should help you improve your portfolio performance.
Are you monitoring your portfolio?
Monitor your portfolio, evaluate its performance at least twice a year and rebalance as needed. Keep in mind to measure your portfolio performance in relevance to your goals and acknowledge your progress.
Finally, remember that you can improve your financial situation with a few small steps at the time. The most important is that you start now. Make a real change in the new year.