Now that 2015 is upon us, you may be thinking about making some New Year’s resolutions. Perhaps you’ll decide to take up a musical instrument, or hit the gym more often, or even learn a new language. All these are worthy goals, of course — but you could also gain some key benefits by working to achieve some financial resolutions. Here are a few to consider:
Fill “gaps” in your investment portfolio. From time to time, you — or possibly your financial advisor, if you work with one — might identify “gaps” in your investment portfolio. For example, you might find that you are making insufficient progress on a key goal, such as saving for a child’s college education. Or you might discover that you need to place additional resources in a particular asset class to achieve proper diversification, which can help reduce the impact of market volatility on your portfolio. (Keep in mind, though,that diversification by itself can’t guarantee profits or protect against loss.)So put “filling portfolio gaps” high on your list of New Year’s financial resolutions.
Boost your 401(k) contributions. If your salary has gone up with the new year, consider boosting your contributions to your 401(k) or similar employer- sponsored retirement plan. You may not be able to afford to contribute the maximum annual amount — which in 2015 is $18,000, or $24,000 if you’re 50 or older — but if you increase your contributions every year, you can greatly speed your progress toward your retirement savings goals. You can put this New Year’s resolution into effect by contacting your human resources or benefits department as soon as you get back to work in 2015.
Here’s another financial resolution: Avoid “unhealthy” investment habits, such as chasing after hot stocks or selling quality investments just because their price has temporarily fallen.
Finally, make it a goal to review your estate-planning documents to ensure they are still current. It’s especially important to update your beneficiary designations on your insurance policies and retirement accounts. If you’ve married, remarried or added a child to your family since the last time you updated these designations, they may be out of date.
Put these resolutions to work in 2015. They may just lead to some happy New Years in the future.
This article was written by Edward Jones for use by Tim Hanstad, your local Edward Jones Financial Advisor.