As we head into a new year of investing, now is a good time to consider where you’ve been and where you’re going and adjust where (and if) needed.
By Brian Spinelli, CFP®, AIF®, Co-Chief Investment Officer as featured in Kiplinger
Starting a new calendar year may seem like the time to revisit your investment strategy, but remember that things don’t just reset on Jan. 1. It may be a new reporting period and an opportunity to revisit your financial goals, but it’s also an important time to brush up on investing basics. But before you consider changing investments around at the beginning of the year, keep these five points in mind:
1. Know what risks you are taking.
Building an investment strategy involves knowing the expected range of outcomes. While you can’t control market returns, you can control the amount of risk you’re willing to take. If you invest in single stocks or bonds, you know your risk is concentrated to the performance of a handful of companies.
Moving into the ETF and mutual fund investment set can get confusing. These are pooled vehicles that have stated investment strategies and a lot of investments underneath the hood. I think both have a role in providing diversification to investors. However, just because they have a lot of securities, take the time to understand what they invest in so when volatility arrives, you understand why they are behaving the way they are.
There are thousands of registered ETFs and mutual funds that many investors access. They can range from stock strategies to bond strategies, commodities, real estate securities and more.
As you head into 2024, know where you are exposed to volatility and have an expectation of how the investments can behave in short periods of time.
2. Be careful anchoring to forecasts.
This is the time of year when published predictions for the coming year start coming out regularly. While forecasts can be entertaining to read, their success rates are generally low.
