Countdown To Investing in the New Year: 10 Questions To Ask Yourself

If one of your New Year’s resolutions involves enhancing and expanding your investment portfolio, look no further. In a true New Year’s Eve countdown tradition, ask yourself these 10 questions to help review your investment plans.

1. What’s My Investment Timeline?
   Not every investment is appropriate for every timeframe. Someone who hopes to retire in the next few years might seek very different investments compared to someone who is just starting in the workforce. Someone investing funds in a young child’s college account may want a different asset mix than someone establishing a family trust to benefit their children and grandchildren. Consider your goals and timeline before selecting individual investments for each account type, such as a 401(k), IRA, 529, or taxable funds.
2. What Are My Financial Weaknesses or Blind Spots?
   Recognizing and controlling your weaknesses may be key to investing success. If you tend to panic-sell when stocks go down, you may want to invest in accounts that restrict frequent trading. If you struggle with paperwork, you may wish to streamline your portfolio by consolidating accounts.
3. What Do I Want To Do With My Investments?
   Knowing your goals—whether retirement, a new car, or college savings—may allow you to work backward from that point and set relevant investment objectives.
4. What Is My Risk Tolerance?
   Investment options range from stable to ultra-risky. Finding a mix aligned with your comfort level can help ease stress when the market dips.
5. Am I Diversified Enough?
   Concentrating all your money in one stock or sector can leave you vulnerable to volatility. Diversification across different types of assets may help balance risk.
6. When Do I Sell This Investment and Why?
   Establish criteria for selling an investment, such as a specific price change or a shift in company structure. Having clear reasons may help you stick to your plan.
7. What if My Investment Becomes Worthless?
   Many companies once in the S&P 500 or Dow Jones are gone. Diversification may help protect your portfolio if one investment drops to zero, but planning ahead is wise.
8. Why Do I Still Own This Investment?
   Regularly review your portfolio. If you’re holding onto a stock with no clear reason, it may be time to sell.
9. Do I Know What I’m Investing In?
   Invest in what you understand, not just what the media promotes. Specific industry knowledge may give you an advantage in decision-making.
10. Should I Manage My Investments?
    Unless you have the time, knowledge, and emotional fortitude to manage your portfolio, it may make sense to rely on a financial professional.

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

S&P 500 Index: The Standard & Poor’s (S&P) 500 Index tracks the performance of 500 widely held, large-capitalization US stocks.

Dow Jones Industrial Average (DJIA): A price-weighted average of 30 blue-chip stocks that are generally the leaders in their industry.

This article was prepared by WriterAccess.

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