Over the next few weeks, these videos will focus on year-end planning ideas.
Today, we will discuss Year-End Investment Do’s and Don’ts:
First is, Do consider rebalancing your portfolio: Many parts of the market went UP in 2024. However, there may be individual investments within your portfolio, that went down OR didn’t go up as much as other areas. This may include REITS, international stocks, and investment grade bonds, all of which have underperformed the S&P 500.
Given these market dynamics, many investors’ portfolios are probably out of whack, and it may make sense to rebalance your portfolio to ensure your allocation is brought back to its appropriate risk tolerance.
Next point is Don’t chase past performance: Today, and EVERDAY is a good reminder to stay away from the current hot strategy du jour! Every year, there is always some investment or portfolio manager that did phenomenally well. Unfortunately, it’s impossible to know beforehand which manager/strategy/or index that will be. This won’t stop aggressive salesmen from capitalizing on a recent success, touting great returns, and encouraging investors to invest in YESTERDAY’S winners.
As I always try to emphasize to my clients, the market moves in cycles. One year’s winners are oftentimes losers in the following years. The key is to stick with a proper asset allocation and plain vanilla investments that will allow you to achieve your goals. Chasing past performance will not work out in the long-term.
And Here's A quick Planning Tip:DO Consider setting up an Investment Policy Statement: One way to stick to a disciplined plan is by developing an IPS to help define an investors’ goals, risk tolerance, and other considerations to ensure they are on track to achieve their objectives. Most importantly, it will help investors ignore the noise and slick salespeople trying to sell them something imprudent.