Money is not the most important thing in life, but it’s right up there with oxygen.—-Dennis Miller
For those of you who like to get an early start on your resolutions, I have a list of things that might positively impact your financial well-being. Admittedly, this is the season when most Americans are preoccupied with spending money, but maybe it’s not a bad idea to also think about preserving and growing it.
1. Hire a good financial advisor. You might know a little more about what is going on, and you could end up with a lot more money. At least that was the conclusion from a recent study of 14,000 adults by ING Retirement Research.
According to the data, those who spent some time with an advisor reported saving, on average, more than twice as much for retirement as those who spent no time at all with an advisor. The number jumped even higher – over three times as much – for those who spent a lot of time with an advisor.
And yet the usage rate of advisors for this sample was a significant minority, only 31%.
2. Save more. You’re going to need it, because you are probably going to live a lot longer than you think. You’ve seen all of the statistics about how little Americans have saved or stashed into their 401ks. Do something about it. Bump your 401k savings rate up a couple of percentage points for next year. If you’re already maxing it out, start an automatic investment plan with a good mutual fund. (I am biased toward the Arrow DWA Balanced Fund!) Yes, you! Do it now before you forget about it.
3. Identify a good return factor and exploit it. Mercilessly. Relative strength and value are the most prominent return factors that have proven themselves over time. Better yet, create a portfolio that uses them both, because they mesh together very nicely.
4. Persist. Markets are going to be uncomfortable at times. You’ve got to stick with a strategy through thick and thin to reap the best returns. It’s most important not to abandon a sound strategy when it is really uncomfortable-that’s what causes investors to perform poorly.
5. If you must listen to the financial media at all, consider going opposite the accepted wisdom. A market is only news when it’s at an extreme-and that’s usually the time to consider going against the grain.
If you decide to get into shape and lose a few pounds also, great. Here’s a link to a Wall Street Journal article about how to stick to your resolutions. It’s all worthwhile.
