Financial resolutions for the new year

Set some clear goals, plan how to get there, enjoy the successes and lessons that follow

Have you made your new year's resolutions yet? It's OK if you haven't, or if you have already broken any of them. Resolutions are merely a statement of intent.

I gave up making new year's resolutions a long time ago. I now make resolutions all year round, instead. I find that I have a greater chance of succeeding when the added pressures of the new year are lifted from my shoulders. If truth be told, the new year is a terrible time to set about doing something important. It is much better to set out our stall when we are more relaxed, more in control. Investing can be like that too.

In the same way that we should not make too many resolutions, we should not try to take on too many different styles of investing, either. We stand a greater chance of success if we channel our energies into just one type of investing. For some, it could be income investing. For others, it could be growth or maybe value investing. Whatever style you choose, aim to be as expert as you can with the discipline. If it is income investing, then focus on shares that can deliver a sustainable and growing income for your portfolio.

Don't get distracted by what others may do. Instead, ask whether a share is capable of generating sufficient cash, while retaining enough money to continue paying you a rising dividend.

Don't join the crowd and simply go with the usual resolutions. Investing can be a bit like that also. Too many people run with the crowd because it seems like the safest thing to do. But it is better to think about what you really want to achieve from your investments.

Work out where your finances are now and set some clear objectives for where you would like to be in 10 or 20 years' time. Calculate how much you would need to invest regularly to achieve those goals. With the three parameters, you should have everything you need to get from where you are now to where you would like to be. 

Share your goals with your friends and family. You might even want to share them with like-minded people.

Join an investment club where you can chat with fellow investors who share your passion for investing. Warren Buffett once said: "I learnt that it pays to hang around with people better than you are, because you will float upward a little bit."?

It's quite uncanny how that seems to work. By sharing your fears and concerns with other investors, you may find that you could achieve your goals sooner. 

To stay motivated, make a checklist to see how you are doing.

If one of your resolutions is to walk a little farther every day, then you would probably buy a device that counts the number of steps you take. When you invest, you should try to follow the companies in your portfolio to see how they are performing. Watching the share price may not tell you much. But watching the financial performance of a company could.

In the short term, there is no correlation between the performance of the company and its share price. But in the long term there is. So monitor the progress of the company. If the opportunity presents itself to buy more shares at a better price, then don't hesitate to do so.

Give yourself a reward whenever you achieve a goal or an important milestone. That can apply to both resolutions and investing. Incentives can be empowering. They can be motivating. They can give you a sense of progress. If your portfolio has outperformed your objectives, give yourself a little treat from the proceeds.

You might want to buy yourself a small present from some of the dividends that you receive. We invest for a purpose. It is not always about giving up the best things in life but to enjoy the proceeds.


Don't be discouraged if things don't always go swimmingly. Treat any failure as a temporary setback rather than a reason to give up altogether. When we invest, we should expect to run into impediments. Peter Lynch once said that we should consider ourselves good investors if we are right six times out of 10. We are never going to be right nine times out of 10. So, enjoy your successes. Enjoy learning from your failures. Enjoy 2017. 

Source: The Straits Times © Singapore Press Holdings Limited. Permission required for reproduction

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