Start the new year off right by making resolutions for your portfolio. Consider evaluating your portfolio regularly, trimming off unwanted assets or liabilities, learning new investing skills, saving regularly, and planning early.
The beginning of the year is a great time to make financial resolutions
Take that first step and make your personal and financial resolutions for 2020
These five resolutions can be guidelines for helping you get your portfolio in shape for 2020
What’s not to like about making New Year’s resolutions? They’re based on good intentions—an opportunity to work toward self-improvement, improve your life, or fulfill your dreams. But sticking to them for the entire year can be a challenge. Often, there’s a spike in enthusiasm during the first couple weeks of the year, and then things tend to dwindle to the point where resolutions are forgotten by spring.
This year, when you make a list of important life changes you want to make, try mixing things up a bit. Consider how you can apply the same resolutions to yourself and to your investment portfolio.
A sedentary life isn’t good for you or for your portfolio. On the personal front, the resolution to exercise more might mean hitting the gym, attending a Zumba class, or going for a walk. But your portfolio needs to be financially fit as well. It might not be prudent to let it sit idle for the entire year. Consider making it a habit to regularly revisit your portfolio and evaluate it weekly, monthly, or quarterly.
Regular portfolio evaluation can help you to determine if your portfolio is helping you track toward your objectives or goals. Does the way you react to the performance of your portfolio warrant changing your asset allocations or rebalancing?
And don’t forget that things don’t always go as planned. Life-changing events could mean your financial goals may need to be modified.
Having a financially fit portfolio helps to make you a more engaged investor.
While evaluating your portfolio, maybe you found some overlapping investments or investments that don’t provide material diversification. You’re familiar with the sage advice of not putting all your eggs in one basket. If you find too many of your assets are overweighted in one sector, you may want to consider shedding some of that extra “weight” and diversifying among different sectors. Spreading out your assets across different asset classes or sectors could help reduce portfolio risk. But keep in mind that diversification does not eliminate the risk of experiencing investment losses.
Another form of extra weight could be your liabilities—mortgage, student loans, car payments, credit card debts, credit lines, etc. Some may be unavoidable, but some could be reduced, restructured, or eliminated entirely.
Think of ways to cut out extra bloat.
Explore our expanded education library.
We all know that a new skill can be beneficial in many ways, regardless of one’s life stage. That’s why resolution-makers often include learning to play the piano or taking an art class in the annual list.
So how about financial knowledge? TD Ameritrade offers many investor education resources ranging from investing basics to complex trading strategies—all at no charge to clients. If you’re an investor, you may benefit by learning about economic and market cycles and how they impact your portfolio. If you’re a trader and have traded stocks for a few years, you may wish to consider learning about options to augment your trading strategy. The tools are available to you.
The markets are dynamic, so stay on top of your game by expanding your knowledge base.
You may have different investment vehicles in your portfolio, such as individual stocks, mutual funds, or exchange-traded funds (ETFs). You most likely have an employer-sponsored retirement plan or individual retirement plan (such as a traditional or Roth IRA). Perhaps you have a health savings account, real estate investments, or annuities. When you have a bunch of assets in your portfolio, it can be easy to lose track of what’s what. You may want to spend some time organizing everything so it isn’t tedious to look at your entire portfolio.
It’s also important to keep track of your income and expenses. This can help you figure out how much you can put away for retirement every year. You can consider automatic savings to help you regularly stash away a certain amount every month.
An organized portfolio can go a long way toward helping you identify how the different components of your portfolio are performing. If it seems daunting, you may want to work with a financial professional to help pursue your financial goals. Personalized Portfolios from TD Ameritrade Investment Management, LLC can provide this type of investment guidance.
Reviewing your portfolio and making financial decisions often become low-priority items. But postponing financial planning to the end of the year might result in hiccups. For example, there may be tax savings strategies you could apply to potentially lower your tax bill. You could also change your contribution amounts to your retirement plans to help reach your retirement goals.
Maximum contribution limits cannot be exceeded. Contribution limits provided are based on federal law as stated in the Internal Revenue Code. Applicable state law may be different.
TD Ameritrade does not provide legal or tax advice. Please consult your legal or tax advisor.
If you wait until the end of the year to take advantage of these strategies, you may miss out on some opportunities. If you start financial planning early in the year, you’ll have the time to make strategic decisions instead of hasty ones. New rules tend to pop up every year, and staying on top of them could help you plan accordingly.
Bottom line: Get all your ducks in a row and make sure you have a long-term plan. And if you feel overwhelmed by the process, TD Ameritrade clients can set up a goal-planning session with a financial consultant.
Think of your portfolio resolutions as activities that may help you work toward securing a bright financial future for yourself and your family. Laying out a carefully considered plan at the beginning of the year and setting portfolio resolutions can be a step in the right direction. The challenge will be adhering to them.
Think of your portfolio as your buddy. The two of you have made the same New Year’s resolutions. Will you both be able to stick to them throughout the year? It may be a challenge worth taking.
Advice tailored to your financial goals
for thinkMoney ®
Financial Communications Society 2016
for Ticker Tape
Content Marketing Awards 2016
Content intended for educational/informational purposes only. Not investment advice, or a recommendation of any security, strategy, or account type.
Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade. Clients must consider all relevant risk factors, including their own personal financial situations, before trading.
Advisory services are provided by TD Ameritrade Investment Management, LLC, a registered investment advisor. Brokerage services provided by TD Ameritrade, Inc. TD Ameritrade Investment Management provides discretionary advisory services for a fee. Risks applicable to any portfolio are those associated with its underlying securities. For more information, please see the Disclosure Brochure (ADV Part 2).
Market volatility, volume, and system availability may delay account access and trade executions.
Past performance of a security or strategy does not guarantee future results or success.
Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Options trading subject to TD Ameritrade review and approval. Please read Characteristics and Risks of Standardized Options before investing in options.
Supporting documentation for any claims, comparisons, statistics, or other technical data will be supplied upon request.
This is not an offer or solicitation in any jurisdiction where we are not authorized to do business or where such offer or solicitation would be contrary to the local laws and regulations of that jurisdiction, including, but not limited to persons residing in Australia, Canada, Hong Kong, Japan, Saudi Arabia, Singapore, UK, and the countries of the European Union.
TD Ameritrade, Inc., member FINRA/SIPC, and a subsidiary of TD Ameritrade Holding Corporation. TD Ameritrade Holding Corporation is a wholly owned subsidiary of the Charles Schwab Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2020 Charles Schwab & Co., Inc. Member SIPC.