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It’s that time of year again. The kids are back in school and you’re finally starting to settle back into your routine of the daily commute, homework, meetings and sports practice.
As you begin to get organized and back into your normal groove, it’s also time for you to get refocused on your investment portfolio. Here are five steps to take to help you get your head (and your money) back in the game.
1. Check in with your financial advisor.
The back-to-school season is the perfect time to schedule a sit-down with your financial advisor to review your retirement plan, including your investing portfolio. That’s because investing isn’t a set-it-and-forget-it arrangement. You need to know where your money is going and how it is performing. Make sure you understand how your contributions are allocated, any fees that are being charged, and any changes your advisor might suggest based on the current market.
What else should you ask your investing professional during your annual check-in? Consider these questions:
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- Overall, how are my investments doing?
- Am I on track to reach my retirement goals? If not, what adjustments should I make?
- How can I improve my investing portfolio?
Now may also be a good time to turbocharge your investing by opening a Roth IRA. While your 401(k) fund options are usually limited to those within your company’s plan, a Roth IRA allows you to choose from thousands of mutual funds. When you meet with your financial advisor, they can help you choose investments for your Roth IRA that complement your 401(k) choices and make the most of your investing dollars.
2. Adjust your tax withholdings.
Now’s the time to make sure you have the right tax withholdings for the upcoming year. If you tend to receive a large tax refund, you might need to adjust your withholdings on your W-4 form.
Let’s say you typically receive a $2,400 tax refund. That’s $200 a month you could use to pay off debt, save or invest! If you invest that $200 every month for 15 years and get a 10% return, you could end up with an extra $83,800 for retirement. Invested for 20 years, that money could jump up to $150,000 and change! Lower your withholdings so you don’t receive a large refund—just make sure you don’t end up owing a lot of money either. Here’s the bottom line:
- Adjust your W-4 if necessary. It’s easy, and you can do it anytime. Better to do it now than wait for later. You’re just losing money in the process.
- Don’t absorb the extra money into your budget. In other words, put that money toward your investments if you can!
- Revisit your withholding amount if you get married or divorced, have a baby, or add a second job.
If you’re not sure how to estimate your withholdings, look back at your tax returns for the past few years. If they’re consistent, you know how much to adjust. If all else fails, talk with a tax pro!
3. Find extra money to invest.
Adjusting your tax withholdings to bump up your investing portfolio is an easy way to boost your nest egg, but that’s not the only option for increasing your contributions. Try to find money that’s slipping through the cracks. For instance, you might want to review your insurance premiums. Some companies provide discounts if you pay the annual premium in full. Others offer discounts if you’ve completed a qualified defensive driving course. Check with your current carrier to find out if you qualify.
When you review policies, make sure you’re comparing apples to apples. Another carrier might offer lower premiums but have a higher deductible. That great deal might not be so great after all!
If you find a lower rate with a competitor, talk with your current provider. Tell them about the better deal you’ve been offered with another insurance carrier and ask if they can beat it. You might be surprised at their response!
4. Keep a long-term perspective with your investments.
No one knows what the stock market will do from one day to the next. The last few years have been proof of that. But time has also shown that what goes down will come back up, and that includes your investments.
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Don’t move around investments just because the market dipped for a day or two—or even when it does a nose dive. That’s not always as easy as it sounds, so keep these tips in mind:
- You can’t outsmart the market by jumping from one investment to another.
- Stick with investments with a solid history of growth.
- Contribute consistently and intentionally to your retirement savings plan.
You need to invest every month, even when the market is in a slump. In fact, if the market dips, you can think of those mutual funds as being on sale! I know it sounds backward, but trust me. You’ll lose money when you keep changing your investments. Put your money in the mutual funds you prefer, and leave them alone.
5. Start investing now.
If you’re in your 40s or 50s (or even your 20s or 30s) and haven’t started investing yet, don’t freak out. You still have time, but you need to take action now! Every day you delay, you’re losing money. I’m serious about this! You need to talk with a financial advisor today. Do not pass go, do not collect $200.
I know you may feel embarrassed or scared, but you can’t let your emotions keep you from planning for your future and building wealth. Enjoying a secure retirement is worth the minor discomfort you might feel when you talk to an advisor for the first time. Your future is worth the time and effort, so get started!
Need help finding a financial advisor? Learn more about SmartVestor Pros in your area.
About Chris Hogan
Chris Hogan is the #1 national best-selling author of Retire Inspired: It’s Not an Age; It’s a Financial Number and host of the Retire Inspired Podcast. A popular and dynamic speaker on the topics of personal finance, retirement and leadership, Hogan helps people across the country develop successful strategies to manage their money in both their personal lives and businesses. You can follow Hogan on Twitter and Instagram at @ChrisHogan360 and online at chrishogan360.com or facebook.com/chrishogan360.