Outside of the usual New Year’s resolutions, such as weight loss, getting out of debt, or quitting bad habits like smoking and drinking, consider adding these three retirement resolutions to make 2012 a successful year of investing.
Focus On Your Strengths
You know you’re getting wiser when you understand the importance of maximizing your strengths and delegating your weaknesses. The same holds true for your retirement accounts. Your commitment in 2012 should be to truly understand what’s working for you and what’s not.
– Take a look at which group of holdings performed better than others. Did your individual stocks outperform broad-based mutual funds and ETFs?
– How much of your total return was attributable to fixed income yields, stocks dividends, and pure growth?
– What factors influenced you to make changes in your portfolio; and if you did not make changes what was the reason?
Quit Wasting Good Money
I’m constantly amazed at the number of people who blindly contribute 3-5 percent or more of their income to a 401(k) plan and yet have no idea how much it is costing them. While there are some changes on the way which including more transparency about investment fees and expenses, the best way to make money regardless of market conditions is to save money. That’s also true for IRA accounts or other assets managed for you by a professional. So quit wasting good money on unnecessary and expensive fees.
– Ask your advisor and 401(k) provider for a detailed list of fees and expenses shown as both a percentage and as a dollar amount.
– Don’t be afraid to do a little detective work. The fees for your investments are typically listed in the prospectus; or go to Morningstar.com and type in the ticker symbol for a quick look at annual expenses.
– As far as employer-provided retirement plans go, check out Brightscope.com and compare your company’s retirement plan fees with other industry players. Use the comparison to get a better grip on fees that could be robbing your retirement and share the results with your company’s management team.
Set Portfolio Goals
It seems like most people are good at setting and working toward goals in every aspect of their lives except their investments. I can share with you from experience that the biggest difference between successful and unsuccessful investors is exactly this: setting and working towards specific investment goals. I’ll spare you the ship without a rudder and other analogies and simply encourage you to identify how much you plan to save, how much you’re willing to pay in expenses, and how much you’d like to see in your account by year-end. Write those numbers down as both a percentage and as a dollar amount. This last step will not only help you develop an annual account review program, it will also help with your other resolutions like leveraging your portfolios strengths, eliminate unnecessary fess and expenses, and ultimately help you achieve the financial life you deserve.