With the weather cooling in many parts of the country, snow falling recently on the East Coast, and holiday shopping well underway, the signs that the new year is almost upon us. Many people, no doubt, can’t wait to turn the page on their calendars to start from scratch in 2021. After all, with the pandemic, the recession and the restrictions of social distance, this has been a challenging year.
With only a few weeks to go until early 2021, it is a good time to start making New Year’s resolutions for your finances and portfolio to make the next year better than this one.
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1. Create goals
When it comes to investing, the starting point is the creation of goals. Obviously, they are different for each person, but the key is to know what you want. You may even want to break them down into short- and long-term goals. For example, you may want to save enough money to take the vacation of your dreams or pay for a home next year. A goal for more in the future could include funding for their children’s college education.
The first step is to find out what you want and then make a plan to achieve it. You should also check your progress throughout the year to see if you are on track or need to adjust things.
2. Define your investment path
After setting your goals, another resolution I suggest is to find out what types of investments you want. Are you looking for companies with slower growth and high dividend payouts? There are several such actions, such as Kimberly-Clark, which increased its dividend for 48 consecutive years, or Colgate-Palmolive, which has a sequence of 57 years of increases.
Or are you looking for faster-growing companies that offer more benefits, but currently don’t pay dividends?
The secret is that your investments correspond to your risk tolerance and adjust to your goals. For your short-term goals, you can invest in safer alternatives, while you may want to invest in stocks for your long-term goals, since you can better withstand the ups and downs of the market.
He also doesn’t have to lean in one direction. You can use some of the money you have dedicated to stocks and invest in dividend-paying stocks and faster-growing companies.
3. Get started
You also don’t need a large amount to start. So don’t let that stop you. Contribute what you can and then you can add to it over time. One strategy is to use the average dollar cost to invest the same amount regularly.
The amount and the time interval depend on you. But the secret is to move on and not allow the lack of funds to stop it.
4. Review your investments
It is also advisable to take the time to regularly review your investments. Every six months or years should be sufficient. When reviewing your investments, you can see what’s going on and decide whether you want to keep them in your portfolio or sell them.
Unfortunately, many people try harder to decide whether to invest and skip this step. But it will help your investments stay on track.
5. Contribute to your retirement plan
If your employer offers a retirement plan like 401 (k), you must contribute an amount that you can afford. At a minimum, if your company offers to match your contribution up to a certain limit, you should try to invest an amount so that you receive the full benefit. For example, if your job agrees to match half your contribution to 6% of your salary, it is beneficial for you to do so.
These vehicles are an excellent way to invest pre-tax money, which reduces your taxable income. The gains that your investments generate from dividends, interest and capital gains are not taxed until you withdraw them.
While no one knows what the future holds, following these resolutions will help ensure that you are preparing for your investment success.