Five Financial Actions for the New Year

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The New Year is often a time for reflection, resolutions, and resets. New commitments to our diet and exercise routine, as well as getting or keeping our financial house in order are among the most common. It’s not unusual that by the end of January, however, that many of our New Year’s intentions have given way to the hustle and bustle of our normal lives.

The New Year is often a time for reflection, resolutions, and resets. New commitments to our diet and exercise routine, as well as getting or keeping our financial house in order are among the most common. It’s not unusual that by the end of January, however, that many of our New Year’s intentions have given way to the hustle and bustle of our normal lives. So, with that in mind, here are five simple actions that one can take to help keep their investment plan and investment objectives on track.

Revisit Your Goals – Despite the traditional recommendations to make all goals specific, measurable, attainable, realistic, and with a specific timeframe (“SMART”), not all goals need to be quite so fully defined. If you haven’t mapped out your goals at this point, set some general short-term and long-term goals. They might include taking time to travel this year or retiring within the next five. It’s not necessary to have the specific destination or retirement date defined, but knowing that you plan on using resources to take a trip within the next year or that you may stop trading time for dollars in a few years, helps to start aligning your resources appropriately.


Align Your Resources Appropriately – One of the most important things we can do is to make sure that money we are going to need in the near term in conservative investments, while money we are not going to need for several years in long term investments where we can accept some short-term volatility for the longer-term growth we aim to achieve. Whether you are already retired or have targeted some near-term spending for things like a new car, home remodel, or travel, it’s wise to shift funds out of the market and into savings. While we are giving up potential growth, we are pursuing conservation of principal and the confidence of knowing the funds can/should be there when needed. We believe in keeping the money you anticipate needing within two years or less in cash reserves as described above.


Consider Rebalancing your Long-Term Investments – For those participating in a retirement plan, such as a 401(k) or 403b, this is an easy process that should take 15 minutes or less, and can be done with a few clicks through your plan sponsors website. For long-term assets outside of retirement plans, this is still a recognized strategy but just takes a little more time to determine the adjustments needed. Rebalancing your investments can help take profits from the areas that have appreciated the most while increasing the balance of the areas that may have decreased, or appreciated the least – essentially selling “high” to buy “low.” While it is often difficult to acknowledge at the moment, we all know intuitively that today’s winners may not always be tomorrow’s. By rebalancing, we take emotion out of the equation and keep our investments and objectives in line.


Reset Savings Objectives – A good investment plan aims to balance getting as much out of today as we can without jeopardizing the goals we have for tomorrow. A good plan will help define the amount required to save each year to pursue your future goals. Once you know the amount you should save to meet your longer-term objectives, any resources above that amount can be used to enhance your lifestyle today. For example, if you know that in order to meet future college expenses for your 12- and 10-year-old, and your retirement goals in 15 years you need to save $30,000 during the year, you can set up a savings strategy to pursue that during the year through a retirement plan and 529 Plan. If you happen to obtain extra income or a bonus during the year, you can feel comfortable doing something fun or different with the funds since your longer-term goals are on track to be achieved.


Work with a Qualified Guide – In addition to helping you with some of the topics above, one of the ancillary benefits of using an advisor is keeping you accountable and on track to pursue the financial priorities important to you. Just like going to the gym with a partner can improve the odds of sticking with it, using a financial professional can improve the odds of achieving your goals on time or ahead of schedule. When seeking a financial professional, consider using an Advisor with the CERTIFIED FINANCIAL PLANNER™ certification and one that is committed to your success over theirs. You can find qualified CFPs® by visiting this link. You can also check a financial professional’s background by visiting Broker Check.


Adam M. Brooks, CFP®
Senior Financial Advisor, Managing Director

We are quickly approaching the time of year when it is no longer timely to wish a friend Happy New Year. However, it is not too late to implement some simple steps to potentially take advantage of the change in the calendar and keep our financial goals on track. As for the diet? We can start that next week.

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