January 03, 2019
Happy New Year!
I know this is a popular time of year to make resolutions, and for many of you that can include financial goal-setting. It’s also the time of year when we are hit with all sorts of predictions on what stocks or investment strategies are going to work best in the coming year.
You may be paying extra attention right now, given that the stock market was so rocky at the end of 2018.
I know that volatility can make you nervous. Please take a deep breath and ignore all the stock and other investing tips. The best investment advice for the coming year has nothing to do with what may–or may not–happen in the economy and the markets. Nobody can say for sure exactly how things will play out.
The best investment advice for 2019 is advice that will build financial security not for a year, but for decades:
Invest in the Right Perspective. If you are investing for retirement, and you have 10, 20, 30 or more years until you retire, what happens in 2019 isn’t too important. Sticking to your long-term plan is what matters. In fact, when you are younger, it’s a good thing when stocks lose value. That means your contributions in your 401(k) and IRA will buy more shares. Over time–remember, you have decades–those shares should rise in value.
If you are approaching retirement, you obviously want to be comfortable with your portfolio’s mix of stocks, bonds, and cash. Review your strategy to make sure it is one that feel rights to you. Your workplace retirement plan may offer free online tools to help you sort through your portfolio allocation. But again, perspective is important. Your retirement may last two or three decades. A portion of your portfolio has plenty of time to grow in the coming years.
Commit to Living Below Your Means but Within Your Needs. If you are looking for a financial goal, this is the big one as far as I am concerned. This is how you avoid credit card debt. Or, this is how you decide to start tackling your credit card debt. You stop spending more than you have, and that gives you the money to pay down debts. You will also be amazed at how it reduces your stress. I can’t say this enough: when you get as much pleasure out of saving as you do spending, you are on the road to lasting wealth.
This goal is extra important right now. While stocks have been going down, interest rates have been going up. If you have credit card debt, the interest rate you are being charged has been rising. That’s just one more reason to make this the year you work on spending less and beginning to pay off high-rate debts.
Living below your means and within your needs is also how you help yourself avoid lifestyle creep. As you approach new purchases in 2019, challenge yourself to spend the least amount possible. For instance, you may qualify for a $30,000 car loan, but spending $15,000 or $20,000 leaves you with more money to put toward financial goals.
Take Care of Yourself. Investing in your physical and emotional well-being is the smartest move you will ever make. This is not some luxury you don’t have time for. Taking care of yourself is the most selfless priority you can have. It is what gives you the strength and the energy to be there for everyone in your life. And, it is The. Best. Gift. Ever. to yourself.
When you take the time to take care of yourself you are investing in being a happier, healthier you today, and decades from now.
For all the financial steps to retirement planning, we often lose sight of the fact that arriving in retirement in the best shape possible will have a huge impact on the quality of our retirement. It just might also allow you to work a bit longer–if that is part of your retirement plan–and potentially reduce your health care costs later on. A healthier you starting in 2019 is going to pay dividends for years.