Four Investing Resolutions to Make for the New Year

Now is the Perfect Time to Strengthen Your Investment Strategy


The New Year presents the perfect backdrop to take some time and reflect on your investing strategy and how your portfolio performed in 2021. Even if you’re very happy with your results, though, now is not the time to get complacent. Rather, spend some time taking stock of what you’ve accomplished in terms of building your wealth, growing your investments, and increasing your net worth, as well as determining which areas may require changes in strategy.

As we settle into 2022 and all the exciting potential it brings with it, here are four investing resolutions you may want to consider as you strategize to achieve your investment goals.

Investing Resolution #1: Minimize Fees

While they may not seem threatening when looking at the smaller picture, fees can be a major roadblock to building your wealth. Take some time to look at where your money is going, add up how much you’re paying in fees, and think about ways that you may be able to minimize your financial burdens. For example, if you’re investing heavily in actively managed mutual funds, you might want to consider moving some of your investments to passively managed exchange-traded funds or index funds instead. Or, if you find that you’re paying a lot of money in advisory fees, perhaps now is the time to find a new registered investment advisor (RIA) that better suits your needs. (You definitely want to be working with an RIA, not a stockbroker, and here’s why.)

Whatever the case may be, a great step towards growing and protecting your net worth is to better understand where all your investment dollars are going so you can make changes as needed.

Investing Resolution #2: Portfolio Expansion

The pandemic has taught us quite a few hard lessons, one of them being a stark reminder as to just how volatile the stock market can be, as we experienced in 2020. While 2021 was a largely stable year for the markets, we are likely to see quite a bit more volatility in 2022. A smart way to protect your investments from market volatility is diversification. If you currently have the majority of your investments in one particular sector or asset class, then you’re opening yourself up to more risk than is necessary. Instead, spread your investments throughout various sectors and asset classes so that if one experiences a downturn in the market, you won’t feel it across your entire portfolio.

SEE ALSO: Three Reasons to Stay in the Market Even When It’s Volatile

Investing Resolution #3: Make Rebalancing a Habit

Too often, investors take a “set it and forget it” approach to investing by taking time to choose where to put their money initially but then getting complacent or forgetting about it. However, taking the time to check in on your investments to ensure that they’re maintaining the right asset allocation to meet your financial goals is incredibly important.

Rebalancing can seem tedious and time-consuming, but making an effort to rebalance more often in the New Year means that you’ll have peace of mind knowing you’re on the right track with your financials. It doesn’t have to be a daily task, but rebalancing bi-annually or quarterly will ensure that you’re staying on top of your performance and making adjustments as needed. If you’d like professional assistance, make sure you’re working with an RIA who rebalances for you regularly.

Investing Resolution #4: Become More Tax Efficient

If you have any money in a taxable investment account, then you’ll want to make sure that you’re being mindful of all the tax implications that go along with it. Take some time to sit down and look into how the various accounts you’ve invested in are taxed, how much they’re taxed, and whether there are changes you can make to better protect your net worth. If you find that your investments are heavily bound by various tax laws, you may want to think about transferring your money into more tax-efficient investments such as ETFs or index funds.

SEE ALSO: Do You Know Your Investor Personality Type?

Concluding Thoughts

The New Year is yours for the taking, and it could be a time of significant potential for you if you take a thoughtful and intentional approach to your investment portfolio. Employing and keeping investing resolutions like the ones listed above can help you strengthen your finances, bringing you closer to the goals you’ve set out to accomplish in the New Year.

At Davidson Capital Management, we provide active, skilled, and transparent investment management – whether you’re an individual, a family, or a corporation. Our team of professionals is dedicated to educating our clients and working closely with them to build an investment strategy that works for their unique financial situation and goals. If you’d like to start a conversation about how to plan the best investment strategy for you, please contact us today.