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The New Year’s resolution is something that we all talk about a lot, but often don’t seem to take very seriously. Most of us who have made resolutions know how easy they are to break.
But if you approach your resolutions as a collection of small, achievable goals, they start to look more realistic. In the spirit of making resolutions that won’t be broken, I’d like to offer a month-by-month guide of some simple steps you can take to help ensure that, a year from today, you’ll be a lot closer to a comfortable retirement.
January: Check in with your portfolio. It’s hard to look forward until you look back. We recently wrote about the value of periodically checking the value of your investments and the start of the year is the perfect time to consider whether you have the right mix of holdings.
February: Save a little more. The best strategy for retirement savings involves both investing wisely and saving enough. The trick is to increase your savings gradually so it’s less painful. Boosting your automatic contributions by a single percentage point can make a significant difference over years and decades. Whether you’re saving through an employer-sponsored 401K, an IRA, or independently, resolve to contribute a little more.
March: Do the research. March is, by and large, such an uneventful month that for many of us, the March Madness basketball tournament is the main event. March is a time that’s well removed from both the holiday frenzy and the summertime slowdown, but still a bit cold and dark, all of which makes it an optimal time to hunker down and educate ourselves about stocks and mutual funds. Truth is, most of us don’t know enough about our own investments. By reading annual reports, prospectuses, and stock charts in depth, you’ll learn a lot.
April. Make tax time work for you. Got a refund? First, invest it. (See our tip for February). Then, adjust your withholdings. Refunds are nice when you get them, but they also mean that you’re withholding too much from your regular pay, which could be the money you need to make regular contributions to your retirement.
May. Watch energy prices. Prices for oil and gas fluctuate throughout the year, often without much rhyme or reason, but they often will rise ahead of Memorial Day and the summer driving season. Considering how much oil influences the entire stock market, keeping on top of oil price trends will help you stay on top of all your holdings.
June. Consider how interest rates are affecting your holdings. Interest rates have been very low for a very long time and this has impacted markets and personal finance in all sorts of ways, including the bond market. It’s not likely that rates will be able to fall much lower, but rising rates may make bonds a more attractive part of your portfolio.
July. Don’t wait a whole year. Do a mid-year check-in on your portfolio.
August. Take a break. When you’ve put in the research and made smart decisions, you shouldn’t have to constantly babysit your portfolio.
September. Do some home improvement. That’s right, home improvement. If you are a homeowner, chances are good that your home is your most valuable asset and, just like financial investments, physical assets need some care and attention. A little bit of home maintenance today can save you down the road and help you maximize the value of this key asset.
October. Consider diversifying. Too often we shape our entire approach to investing around a few stock tips we once received. As a result we concentrate on certain sectors such as technology or energy or consumer goods, to the exclusion of some other good opportunities. Investing is part strategy and part education. Make this month a time to learn about a sector you’ve avoided whether it be small caps, international stocks or something else.
November. Watch fees. Are you heavily invested in mutual funds? When was the last time you checked the fund fees? Fees can vary significantly from fund to fund and while there’s no magic formula for how much is an acceptable fee, you should at the very least understand how much you’re paying different fund managers. In the same way that small contributions to a retirement over time can add up, seemingly small fees can, over time, take a significant amount away from your hard-earned savings.
December. Give yourself a gift. Make an IRA contribution, or an extra mortgage payment. Both will contribute to your long-term goals and save you a bit on taxes in … 2016!
Collect Dividend Income Every Month!
We’ve put together a simple calendar that pulls together all the market’s best dividends into a single, easy-to-read document. One look, and you’ll be able to set up a 12-month dividend stream for regular income every month. Click here to see the full details!