It is that time of year again. Minnesota investors are taking the time between the December holidays to set resolutions for the New Year. At least one of those New Year’s Resolutions should be to handle your investments better in 2013.
Plain and simple, a resolution is a promise that you make to yourself to change a habit or to develop a new habit. That resolution then becomes a personal goal for the New Year.
Fear is the worst part of changing a habit. Fear of failure, fear of success, fear of the unknown, fear of making a mistake. Most people suffer from a combination of fears at different times of their investment lives.
Plans, goals, and ideas to change are no good on their own. You have to get started and do something.
So get started this last week of 2012. Just pick one part of your investment management life and do something right now to make changes for the New Year.
A great example of a small first step would be to pull out your most recent quarterly statement from your company retirement plan account. Every month thousands of Minnesota company retirement plan participants contribute millions of dollars of their own money to their company retirement plan accounts. For most Minnesotans, their individual company retirement plan account is one of their largest financial assets.
Over my 29 years as an investment advisor, the biggest difference I have seen between people that manage their investments well and those you don’t manage their investments well comes down to one simple fact.
Successful investors take time throughout the year to talk about their investments. These investors talk with their spouse, friend, family, or professional advisor about how much risk they are comfortable taking with their stock and bond market investments in their individual company retirement plan account.
After that those conversations, a risk management strategy develops. Having a risk management strategy in place makes the next stock market decline less of a surprise; and more of a manageable event.
These investors are not smarter or more talented. Likewise, they are not in some way more gifted than every other investor. The one thing that they do more often is pay close attention on a regular basis to what is going on with their investments. And they talk over their investment risk management strategy with someone who they trust.
I know that you are busy. I realize that you have plenty of reasons to keep your stock and bond market investments as they are now. That investment management strategy only guarantees that your investment returns next year will be not much better than they were this year.
In 2013, find someone who you trust to talk about your investment strategy and how you will manage stock market risk. Ask the investment questions that you have always wanted to ask. Put a game plan in place to limit the amount of investment losses you take in the New Year.
Ric Lager
Lager & Company, Inc.
