Vail Daily column: Consider these New Year’s financial resolutions
Now that 2015 is upon us, you may be thinking about making some New Year’s resolutions. Perhaps you’ll decide to take up a musical instrument, or hit the gym more often, or even learn a new language. All these are worthy goals, of course — but you could also gain some key benefits by working to achieve some financial resolutions.
Here are a few to consider:
Fill in the Gaps
• Fill in the gaps in your investment portfolio. From time to time, you — or possibly your financial advisor, if you work with one — might identify gaps in your investment portfolio. For example, you might find that you are making insufficient progress on a key goal, such as saving for a child’s college education. Or you might discover that you need to place additional resources in a particular asset class to achieve proper diversification, which can help reduce the impact of market volatility on your portfolio. (Keep in mind, though, that diversification by itself can’t guarantee profits or protect against loss.) So put “filling portfolio gaps” high on your list of New Year’s financial resolutions.
Boost Retirement Contributions
• Boost your 401(k) contributions. If your salary has gone up with the new year, then consider boosting your contributions to your 401(k) or similar employer-sponsored retirement plan. You may not be able to afford to contribute the maximum annual amount — which in 2015 is $18,000, or $24,000 if you’re 50 or older — but if you increase your contributions every year, you can greatly speed your progress toward your retirement savings goals. You can put this New Year’s resolution into effect by contacting your human resources or benefits department as soon as you get back to work in 2015.
Get Rid of Unhealthy Money Habits
• Eliminate unhealthy investment habits. As part of your general New Year’s resolutions, you may have decided to cut back on carbohydrates and sugar-laced soft drinks, with the expectation that these moves could help your overall health. But you can also make unhealthy financial moves, such as chasing after hot stocks (which may already have cooled off by the time you find them) or selling quality investments just because their price has temporarily dropped. Strive to focus more intently on your long-term investment strategy, as opposed to reacting to short-term stimuli.
Review Estate Strategy
• Review your estate strategy. During any given year, you might experience major changes in your life — marriage (or remarriage), new child, new home, etc. — and these changes will have profound effects on your estate plans. But whether or not you encountered any of these events in 2014, it’s a good idea to look over your estate planning documents — such as a will, living trust, power of attorney and so forth — to make sure they are still current with your wishes. It’s especially important to update beneficiary designations on your insurance policies and retirement accounts so that they are aligned with the wishes you have expressed in your will. And if you haven’t drawn up your estate plans yet, then make a New Year’s resolution to do so in 2015 — because it’s never too soon to take the steps necessary to protect your loved ones in the future.
(Edward Jones, its employees and financial advisors are not estate planners and cannot provide tax or legal advice. You should consult your estate-planning attorney or qualified tax advisor regarding your situation.)
Unlike some New Year’s resolutions, these financial ones won’t require a big shift in your lifestyle. But if you can stick to them, then they can make a big difference in your life.
This article was written by Edward Jones for use by your local Edward Jones financial adviser. Edward Jones and its associates and financial advisers do not provide tax or legal advice. Tina DeWitt, Charlie Wick, Kevin Brubeck, Dolly Schaub and Chris Murray are financial advisers with Edward Jones Investments. They can be reached in Edwards at 970-926-1728 or in Eagle at 970-328-4959 or 970-328-0361.