5 Important Investing Resolutions To Make For 2023 (And Beyond)
Every year when the calendar flips over into a New Year, we make promises to ourselves.
“This year will be different. This will be the year I get into shape… This is the year I will get my financial house in order… Get out of debt, save more money, etc.”
You get the point. The routine and the goals are always the same.
Gym memberships skyrocket. When I worked as a financial advisor, the first quarter was my busiest time of the year. Folks go to banks in droves to open savings and investment accounts.
But whether it’s getting in shape, getting out of debt, or saving for retirement, I’ve noticed many people skip an important step in reaching their New Year’s resolutions or goals.
They never take a moment to assess where they are right now.
This may seem trivial, but reflecting on what put you in your current situation is critical. If you don’t understand the habits and behaviors that put you in your current situation, then there’s a good chance you’ll find yourself right back in the same situation. You’ll be sitting and thinking the same things next year as you are now. And you’ll be setting the same goals — in other words, spinning your wheels.
Be Honest With Yourself
Of course, not fully committing and following through on your goals is another pitfall. But we need to take the time to look back and understand what got us to where we are today.
Be brutally honest with yourself. It’s a rare quality (we lie to ourselves constantly). And if you don’t like where you are, you need to make different choices. It could be as simple as not drinking soda or skipping dessert. Maybe you decide to cut the cord and not pay for cable TV anymore. Maybe that money could go toward paying off debt or into savings.
Consider what Marshall Goldsmith wrote in his book, “What Got You Here Won’t Get You There.” He says when it comes to improvement (whether it’s our health or investing or leadership), instead of creating a “To-Do” list when looking to improve, try going with a “To-Stop” list.
In order to become a better investor, sometimes all it takes is for us to stop making the same mistakes we’ve made in the past. That could be as simple as not taking a flyer on a “hot stock” we overheard during a holiday party. Or not watching small losses tumble into large ones before selling. Either way, putting items like this on your To-Stop list can dramatically improve your results.
Whether or not you decided to make New Year’s resolutions, I’m willing to bet that most of you have a goal of becoming a better investor.
So toward that end, here are five tips that will help keep you in the green in 2023 and beyond.
5 Investing Resolutions For 2023
1. Ignore The Daily Market Chatter
This first tip is one that I must constantly remind myself to keep in mind. After all, there’s hardly a day that goes by when I’m not plugged into the market. I’m always either reading or researching something regarding the market or the economy. It’s part of my job.
While it’s good to stay abreast of the market, being engulfed in the daily market hysteria causes nearsightedness — you lose sight of the bigger picture. You forget about your long-term goals — and pretty soon you find yourself trading stocks on a daily whim.
When investing for long-term success, you must think about what will be making money now as well as 15 years from now. We want to buy great companies at a great price and hold on to them for the long haul.
2. Understand What You’re Investing In
If you were asked about each stock in your portfolio, you should at least be able to pass the elevator test. This means could you provide an elevator pitch to someone on what the company does, its important key metrics, as well as its growth prospects?
Beyond that, how does it fit into your portfolio? Does it give you more exposure to the healthcare industry or the technology sector? Is the stock meeting your expectations? Is it performing well relative to its risks and the overall market?
And perhaps the most important: Why did you buy the stock in the first place and is that thesis still valid today?
These are some good questions to ask as you look through your portfolio or before you buy your next stock. Having a firm understanding of your investments will help with the first tip as well. You’ll be less likely to be swayed out of a stock or into a stock from the daily market hysteria.
3. Your Best Investment Might Already Be In Your Portfolio
Investors tend to think that they must constantly be looking to add a new stock to their portfolios. But the truth is that if you have extra money that you would like to invest, your first stop should be your current portfolio.
It takes a lot of time to form a solid understanding of a business. And if you’ve followed tip number two, then you should already have a solid understanding of your holdings. You should know if one of your stocks is currently undervalued by the market. If it is, then it could be a good time to invest your extra cash into something you already know and own.
So before you take a flyer on the day’s “hot stock,” look first to your portfolio. Your best bet could be right under your nose.
4. Don’t Be Afraid To Sell
This is one of the hardest things for an investor to do. Whether selling to capture a gain or cutting a loser short, this phenomenon provides an interesting insight into investor psychology.
Selling at a loss is like admitting you’ve made a mistake. And no one likes to be wrong. On the flip side, booking a profit takes its own toll on your psychology. It’s easy to wonder if you’ll miss out on future gains.
This causes investors to hold on to a stock for all the wrong reasons. Don’t think about what might happen after you sell a stock. If it makes sense to sell, then do it.
5. Set Small Milestones To Reach Your Ultimate Goal
Whether your goal is to retire by a certain age, make a certain return each year, or even lose weight, this is absolutely key. Setting realistic weekly/monthly/quarterly goals will help you stay on track to hitting your bigger goal.
By forming shorter-term goals, not only will your larger goal feel more achievable. And the constant reminder will help you stay on track. Don’t forget to write your goals down. According to a study by Gail Matthews at Dominican University, those who wrote down their goals accomplished significantly more than those who didn’t.
Bringing It All Together
I hope these investing tips are useful as you form your investing roadmap for 2023. If you need more guidance for the New Year, I have another tip for you…
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This report is easily one of the most hotly-anticipated pieces of research we release each year. And if history is any guide, it could be one of the most profitable things you read all year…
In my latest presentation, I’ll tell you how you can receive an in-depth report that reveals the research and analysis that went into these forecasts. I also describe the specific investment opportunities which can help you reap exceptional profits from each one of my predictions.