It happens every year. January 1: You’re feeling motivated. This is the year you’ll go to the gym every day, meditate and prep meals like a boss. February 1: Yeah, not so much.
This year, pick some New Year’s resolutions that will stick. Here are five investing moves that will get your portfolio in order so fast, it might still be 2019 when you finish.
1. Diversify your accounts with a Roth IRA
Most investors know they should diversify their investments, but did you know you can diversify your investment accounts? If you’re contributing to a 401(k) at work, it’s a good idea to contribute at least enough to earn any matching dollars from your employer. After that, you should consider putting any additional retirement savings into a Roth IRA.
A Roth IRA provides tax diversification alongside a 401(k). 401(k) contributions are typically made pretax and then distributions in retirement are taxed as income. But Roth IRA contributions are made after-tax, which means your money grows tax-free and you don’t pay taxes on retirement distributions.
If you haven’t yet started investing for retirement, a Roth IRA is also a great first account, especially if you don’t have an employer retirement plan like a 401(k). If you do, be sure to max out that employer match before you invest elsewhere. You can open an IRA at any online brokerage.
2. Invest more money with automated deposits
In a recent survey conducted by The Harris Poll for NerdWallet, more than a third of investors said they wish they would’ve invested more money in 2019. One easy way to ensure you’re saving the amount you want is to set up an automatic deposit into your investment account.
If you can, send that money directly from your paycheck. If you never have the cash in your checking account, you never have the temptation to spend it. If your employer can’t split your direct deposits into more than one account or doesn’t offer direct deposit, schedule automatic transfers to occur from your checking account after your paycheck is deposited.
Automating your investment contributions takes just a few minutes and saves you the time you’d spend moving your money manually. Saving the same amount on a regular basis makes it easier to budget for your contributions instead of stomaching larger deposits all at once. If you feel like going the extra mile, try to raise your contributions by 1% every year. You might not even miss it.
3. Review how much you’re paying in fees
Account fees, transaction charges, high investment expenses: All of these costs eat into your portfolio’s return. If you put $500 a month into a brokerage account for 30 years, earn a 6% average annual return and pay fees of 0.50% of your balance each year, you’ll end up sacrificing over $44,000 in returns.
While fees are hard to avoid completely, there are certainly ways to reduce them. Start by looking through your investment account statements to find what fees you’re being charged by your brokerage or account provider. If you’re invested in mutual funds, also take a look at each fund’s prospectus. These documents are available on your broker’s website, and the first few pages will outline the fee, called an expense ratio, charged by the fund.
“You should question any mutual fund or exchange-traded fund that has an expense ratio greater than 0.50%,” said Spencer Stephens, a certified financial planner and owner of Rooted Interest Financial Planning in Holladay, Utah, via email.
If you’re investing through a 401(k), you might not have an alternative fund, as these plans have small investment selections. But in any other investment account (like an IRA), you can shop around for lower-cost funds. Most online brokerages offer fund screeners, which you can use to sort available mutual funds and ETFs by expense ratio. And if your brokerage is still charging you a trading commission, consider switching to one of the many online brokers now offering free trades.
4. Roll over old 401(k)s
A 401(k) is a valuable employee benefit, which means you don’t want to leave it behind when you leave a job. If you have old 401(k)s lingering at past employers, take a bit of time to roll them over into an IRA.
It’s important to do the rollover correctly, though; otherwise, you could trigger taxes. Don’t cash out your balance or have your provider write you a check directly. Instead, ask your 401(k) plan provider to do a direct rollover into an IRA. You may also be able to roll your balance into your current 401(k).
5. Update your beneficiaries
When you’re in the throes of planning a wedding or dealing with swollen ankles from pregnancy, the last thing on your mind is updating the beneficiaries on your investment accounts. But these selections are important, and New Year’s resolutions are a good reminder to make them.
“A beneficiary assignment (on an IRA, 401(k) or otherwise) supersedes the will of the deceased. So whoever the beneficiary is will receive the money, regardless of what the will says. This applies to both retirement and nonretirement accounts,” Ian Bloom, a CFP and owner of Open World Financial Life Planning in Raleigh, North Carolina, said in an email.
Maintaining up-to-date beneficiaries makes the transition smoother and ensures your money will go where you intend it to.
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Alana Benson is a writer at NerdWallet. Email: abenson@nerdwallet.com.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
