3 New Year resolutions well worth keeping

Famously, New Year resolutions are difficult to keep. We start off with good intentions, intending to diet and join a gym, but by February it’s back to pork pies on the sofa as we binge on reality TV.
 
I’m exaggerating, I know. But you get the point: despite our best intentions, it can be difficult to stick to New Year resolutions.
 
But when it comes to New Year resolutions to do with investing, it really is worth going the extra mile, and making some extra effort.

And that’s because investing is all about building wealth – your wealth. Wealth intended to provide for you in your retirement, and to deliver on your long-term lifestyle aspirations.
 
Backslide on going to the gym, or reading 25 of the Great Classics, and the consequences won’t be as serious. But a poorly performing investment portfolio can have lasting – and serious – repercussions.
 
So here are three suggestions for New Year resolutions that are worth sticking to.

Go global

I’ve written before, several months ago, about the importance of a globally diversified portfolio. And that’s because ordinary retail investors – that’s you and I, in short – are often notoriously prone to ‘home country bias’.
 
Granted, the FTSE 100 has more of a global feel to it than the leading indices of many other countries, but there’s no denying that this global feel is concentrated in just a few industries and sectors. Very largely, they’re all resources stocks, financials, or pharmaceuticals.
 
Worse, there are entire industries and sectors that are wholly missing. Here in the UK, we have no listed companies that are the equivalent of Boeing, Airbus, Alphabet (Google’s parent company), Microsoft, Tesla, Volkswagen, BMW, Honda or Toyota, for instance.

How to remedy this? Buy individual foreign stocks directly, or (an often-better option in my view) take a look at some of the large UK-listed global investment trusts that are out there.

Needing income? Don’t leave it too late

Very broadly, investors fall into two categories: growth-focused investors, and income-focused investors.
 
If you’re in your twenties, thirties or early forties, I have absolutely no quarrel with you if you’re a growth investor. But past your mid-forties, I have a warning bell to sound if you’re thinking of using your investments to fund your retirement, or to buffer a gradual transition into retirement.
 
And it’s this: I’ve seen a good number growth-focused investors approach retirement with very little actual experience of income investing. And to be blunt, age 65 – or thereabouts – isn’t the best time to start acquiring that experience.
 
Worse, I’ve seen investors doggedly determined to never be an income investor, but simply sell a few stocks every so often to generate cash.
 
Plunging markets during 2020 will have made that particular choice a painful one: better by far to take your income from dividends, in my view, rather then being forced to sell stocks at depressed prices.

So what to do? If you’re intending to be an income investor in your later years, start transitioning into it in plenty of time.

Invest in yourself

Finally, the business of building up a decent nest-egg is a serious one: sustained wealth accumulation is rarely an accidental process.
 
Yet all too often, it’s left largely to chance.
 
A few investment funds here, a few shares bought as Sunday newspaper tips there. A little buying, a little selling – and precious little by way of a strategy, or reasonable asset allocation.
 
So my final resolution is this: invest time in your portfolio.
 
Take the time to read, to think, and to browse the wealth of online resources out there. Know what you want to achieve – and more importantly, have a plan for getting there.
 
And of those various activities, I’d suggest, it’s the thinking and strategising that are probably the most important – and most overlooked – activities.

The good news? These can be done anywhere. On the sofa, certainly – accompanied by a pork pie or not, as you choose. But also at the gym, on the golf course, or during a long walk.
 
So maybe you can achieve that exercise-related New Year resolution after all…