Resolution #1: Set an actual investment strategy. I'm talking about sitting down and going over your investment goals, how long it will be until you need to tap your investments, thinking about how much risk you're really willing to take and then creating a diversified mix of stock and bond funds that's appropriate for your situation.
If you need to familiarize yourself with fundamental concepts like asset allocation before you do this, fine.
That point is, though, that you want to have a plan. Otherwise, you'll be like someone setting out in a car with no real destination in mind and no map. There's no telling where you'll end up.
Resolution #2: Stifle it! Stifle the impulse to make changes to your portfolio every time you read a story about how to capitalize on rising gold prices, the Fed's quantitative easing program or whatever the investment theme du jour happens to be.
As counterintuitive as it may seem, the more investing moves you make, the more mistakes you're likely to make, the more extra costs you'll probably incur and the lower your returns are likely to be.
Resolution #3: Stick to resolutions #1 and #2. I'm not trying to be cute here. I'm serious.
The fact is that setting a strategy and then standing pat (aside from periodic rebalancing) is hard, especially when every investing pro is telling you that the New Normal requires a new investing strategy or when every fiber of your being is screaming you'll be left behind if you don't move a big chunk of your portfolio into emerging markets funds.
Indeed, it's when something big is afoot -- the market's falling apart or in the midst of a huge surge -- that the temptation to make some move, any move, is greatest.
Of course, those are also the times when it's most crucial that you don't give in to the urge to abandon your strategy, since that's when you're most in danger of selling out at a bottom or buying in as the sizzle is about to fizzle.
So find some way to squelch the all-too-natural impulse to jettison your strategy just when you need it most. If you know that watching TV finance and investing shows leaves you itching to tinker with your portfolio, then don't watch them.
Or maybe some other technique will work, like promising yourself you'll always wait at least a week before making a change in your portfolio. Or vowing that before you add or jettison a holding, you'll find five reasons why this move might not work out.
But come up with some speed bump that will slow you down, so you're less likely to make a rash decision you may later regret. Can I promise that making and sticking to these three resolutions will prevent you from incurring losses or generate the highest possible returns? Of course not.
But I can tell you that by adopting this approach you will at least have a reasonable and rational plan for investing in the face of market uncertainty. And that beats guesswork any time.
https://news.fidelity.com/news/article.jhtml?guid=/FidelityFeeds/pages/three-investing-resolutions&topic=investing
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