2019 Investment Checkup

Your savings are your future.

How you manage your money today impacts your quality of life tomorrow.

When it comes to your approach to investing, of course you need to be consistent, but you also need to be agile, determined and diversified.

It’s not as hard as it sounds.  

Simply, while you should almost never jump in and out of the market, you certainly don’t want to sit tight based on something that was working two years ago.

Find the middle ground.

How can you make certain you’re not over-reacting to a changing market, or, conversely, not just standing pat and “letting it ride?”  

It’s the New Year.

Start it by asking yourself these 3 key investment questions:

1) Do my savings and investment allocations align with the “new” me?

You hear a lot about risk tolerance and investment allocation.

Your risk tolerance is the degree of “market mood swings” you’re willing to endure in your investments. 

During the recent, more-chaotic cycle, have you caught yourself checking the value of your investments?

How do those numbers make you feel? And, just as importantly, how do they motivate you?

People who gamble on high-risk investments tend to be more anxious when the market hits a rough patch because they’ve exposed themselves to losses they might not be able to afford.

Then there are investors who’ve forgotten recent history.

Over the last 10 years, as the market crept higher—and as 2008 completely disappeared in the rearview mirror—many people “upped” their investment risk exposure; either confident that the market would never stop climbing, or scared they were missing out.

Don’t be that person.

If you’re well invested, with a balanced approach across various risk levels and asset classes—and if you stay invested—my experience has been that over the long term you’ll be more likely to benefit from the upswings than “market timers” who jump in and out based on trends and cycles.

When it comes to investing, remember to:

  • Be consistent
  • Set short and long-term goals
  • All things being equal, choose the less-risky option
  • Don’t try and “time” the market
  • Protect yourself by diversifying

2) Am I really paying attention to my retirement accounts?

Let’s talk about 401(k)s, 457s, and 403(b)s.

If you’re still working, you (or your partner) probably have one.

The beauty of defined contribution plans is that they offer you things like:

  • Automatic withdrawals
  • Company matching
  • Pre-tax contributions

It can all seem easy. And you can, to some degree, wind them up and let them grow.

But therein lies the problem: It’s also easy to forget about them.  

Your retirement account(s) need attention, and right now’s the perfect time to give them some.

First, review the way your savings are invested.

Have your employer’s investment menu or plan options changed since you joined? If so, how? Are you taking advantage of those changes? (Ask your plan administrator what you might be missing.)

Do you have a 401(k) with a former employer? (Don’t just leave it there. Consider rolling it over into an IRA, or your current employer’s plan.)  

Does your 401(k) plan have an automatic rebalancing feature? (This will keep your investments in line with your tolerances and help to limit surprises, which could literally save your retirement in the event of a dramatic [i.e. massive] downturn.)

And if retirement is closing in, consider reining in your risk.

Second, the amount you can contribute to your plan just went up to $19,000.

2019 is here, and with it, max contributions have increased from $18,500 to $19,000 (it’s an additional $6,000 if you’re over 50).

Do you get quarterly bonuses? Did you get a raise this year?

If you’re not already maxing out your contributions, consider diverting that extra money to your plan.

3) What kind of investment help do I need?

If you’re not working with a full-time fiduciary investment advisor, you should be.

This is not a pitch, it’s a speech.

Sure, if you aren’t already a client, I hope you’ll work with us.

I believe in what we do. And we do it for the right reasons.

But, if it’s not us, just make certain that every recommendation you receive is in your best interests 100% of the time.

Here’s how you achieve this: “Hello, advisor/prospective advisor? Are you a full-time fiduciary, and how do you get paid?”

The only answers you should accept are: “Yes,” and “I’m a fee-based advisor.”

I believe the combination of fiduciary advice and fee-based advising (as opposed to, say, commission based) is the best way to ensure your interests come first.  

And, even if you’re already working with an advisor you like, you should still get a second opinion.

You have nothing to lose.

I consistently meet with people who like their current advisor, but who have no idea that he or she is making unnecessary trades or charging them for investment rebalances that they don’t really need.

These actions can be portrayed as motivated by a desire to serve your interests (but they’re just doing it to earn fees).

Remember, those extra fees come right out of your savings.    

Conclusion

Consistent saving and smart investing are essential to having the retirement you want. Just like compound interest, smart decisions add up over time.

Don’t leave anything to chance.

If you aren’t certain that your investments are aligned in support of your goals and tolerances, contact us today.