It’s a new year - time to tackle these investment tasks.
The elections are over, yet some would say that chaos in the US political system still reigns. However, in spite of the turmoil in DC stocks ended 2020 with strong gains and a tailwind, posting all new highs during the first week of January.
There is much to look forward to as we begin the New Year. It’s feasible that COVID will be brought under control once a majority of people have been vaccinated and we get back to a degree of “normal”. The analyst consensus estimate of corporate earnings predict significant growth in earnings for both 2021 and 2022 exceeding all past levels, indicating strong growth in our economy. And we hope and pray the recent political instability of the past months will finally settle down and we as Americans can find common ground to tackle the challenges facing the US.
If you didn’t have a chance to do a year-end review of your investment portfolio. It’s a new year and there’s no time like the present. You may find adjustments are needed to keep your investments on track towards helping you accomplish your goals.
Investments Tasks to Tackle in the New Year
Evaluate Your Investment Portfolio - How are you currently invested? Overall, how did your investments perform against your expectations? Are you comfortable with the amount of risk you are taking? What factor(s) may have caused your portfolio to perform the way it did? Are you adequately and appropriately diversified? - if you find yourself unsatisfied or not sure call your investment advisor, they are there to walk through some of these questions with you. Either way, you may find that there may be reason to reconsider your investment strategy.
Take Account of Your Cash Reserves- Did you have an unexpected expense in 2020 and needed to tap into your emergency fund. Well this is what it’s there for; an unexpected expenses or loss of income. Go back and ensure your emergency fund, or cash reserves, is up to snuff. If you haven’t established one, consider doing so, then look at how you are going get there. Often, allocating or using monthly automatic savings tools can helpful. If you’re retired and taking regular distribution from your investments, the stock market is up and now might not be bad time to talk with your financial advisor and consider replenishing that emergency fund.
Consider Rebalancing - If you mange your own investments, with recent market movement, it’s possible your portfolio is no longer in balance or in line with your goals. If one particular investment performed better than others last year, it could now represent a greater percentage of your portfolio. As you enter 2021 if your goals or timing of that goal have changed, this also might be a reason to rebalance or reconsider the amount of risk you are taking.
Set Goals for the New Year - You’ve likely set your new years resolutions and goals for the new year, so now is a great time to align your finances and investments with those goals. You might consider increasing your retirement savings/contributions to your employer retirement plan or individual retirement account (IRA), or perhaps look at a college fund, 529 plan, in 2021. A question we often encourage our clients to ask is “God with the resources you have provided me and the various goals he has placed on your heart what is the best use of these funds.” He might be calling you one direction over another, or calling you to step out in faith, or it may come down to balancing those competing goals. But if you don’t take the time to ask the question how will you know.
As we move into 2021, remember that sometimes it can be easy to get caught up in the noise, but the real question is are you reaching your personal financial goals? Often in times like these, most families and working professionals are looking to confidently invest their hard-earned money that will ultimately allow them to shift their focus from earning income to enjoying retirement and later-life. The pandemic has accelerated that focus for many with the sense that nothing in life is certain – well the only certainty is in fact uncertainty.
Taking the time to review your investments and working with the right financial advisor can help provide clarity and confidence helping you identify your options and confidently invest towards your financial future.