Happy belated New Year! We are checking in to see if you have kept your resolutions – or like the vast majority of Americans – have already broken them. Remember, it is never too late to start on your resolutions – nor is it ever too early to begin planning for your retirement. Here are a few resolutions to make the New Year – and many years to come – a financial success.
- Seek high growth investments – Many wealthy people achieve their prosperous retirement funds by diversifying their portfolio with instruments that potentially achieve high rates of growth. Simply put, you have to strive for high rates of growth if you really want to retire comfortably. This demands diligent research, with an understanding of how varying instruments change with cyclical market conditions.
- Boost your savings – Sadly, according to the AARP’s recent studies, 52% of all American households only have less than $25,000 in their savings for retirement. The era of re-financed wealth and exuberance from exponential real estate growth has come to a thudding end. With that said, expect a significant spending pullback in 2008, as the reality of a receding economy hits the general population. This will impact all sectors of the United States, turning various equity sectors red. Make sure that your strategy for savings is intact in 2008. Ensure that you pay yourself first, putting away a minimum of 10% to 15% of your salary.
- Eliminate debt – Despite Bernake’s signaled deeper rate cuts, this move is a double-edged sword. If you have variable rates, your debt will benefit, and if you have fixed rates, you always have the option to re-finance. However, the key to achieving greater wealth is to inhibit any growing consumer debt. Living within your means – and putting away savings – is the ultimate key to building true wealth. Your capital can be much more productive invested in financial instruments.
- Scrutinize your IRA or 401(k) – Switch your IRA savings to low-cost and no load index funds, such as the Vanguard funds. When it comes to your 401(k), ensure that your profits are not eaten by fees. On average, a 401(k)’s annual profits are depleted by 1% simply by fees, but if you consider choosing a financial adviser that only charges .5% annually, you instantly gain more funds for your retirement.
- Continue to diversify – Diversify and diversify. Remember to never put all eggs in one basket. Not more than 10% of one’s savings should be put in one investment place.
2008 may not bode well for the overall American economy, but it can be a great year for your retirement future – as long as you implement a plan that builds your retirement wealth. With the changing market dynamics, there will continue to be investment opportunities, especially abroad, which will add another level of diversification to your portfolio.