CNN recently released an article called five money resolutions to make that gives some good ides for money moves to make this year…
1. Rebalance your Portfolio
Last year was a great year for stock investors. Which is good news, but your allocations in your 401k or IRA are probably out of whack. So if at the beginning of 2009 you had a balance of 50% stocks and 50% bonds – you might now be looking at something like 65% stocks and 35% bonds due to the success of stocks this year. If that is the case, your portfolio has now become a little riskier with more of it being invested in stocks. A simple portfolio rebalancing will bring you back to that 50%/50% allocation (or whatever allocation you are seeking).
According to the Schwab Center for Financial Research, “A $100,000 portfolio invested in 60% stocks and 40% bonds and cash and rebalanced annually for the past 37 years would have grown to $2.9 million, vs. $2.5 million for one that was never rebalanced.”
2. Earn one new credential
“The economy is getting back on track, but the job market has a long way to go. So develop a skill that will make you more attractive to your current employer or a prospective one.”
So whether you have a job you love or a job you hate, improving yourself by learning more is always a good thing.
3. Convert to a Roth IRA
“Face it, taxes aren’t going anywhere but up. That means it’s smart to own a Roth IRA, which offers tax-free withdrawals after age 59½. In 2010 anyone, regardless of income, can convert a traditional IRA into a Roth. You’ll have to pay income tax on the money you convert today, but if you’re in your mid-forties, you’ll come out ahead with the Roth even if your tax bracket stays the same or gets a little lower after retirement, according to a T. Rowe Price analysis.”
4. Get cheaper health care
“Your insurance premiums and co-pays may be higher this year, but chances are you won’t have to shell out more for a visit to your primary-care doc. Many insurers have nixed co-pays on preventive care because it saves them (and you) money on medical costs down the road.”
I have also been considering an alternative to health insurance called Medishare.
5. Get a better bank account
Let’s face it – interest rates on savings accounts are pretty terrible right now. But, there are definitely some banks that are offering much better deals than others. By searching you can probably find a higher interest rate on your savings account as there are some major differences among banks. I love ING Direct for a variety of reasons, but having the best interest rates isn’t one of them. For that SmartyPig and Everbank tend to do much better, if you are willing to jump through their hoops.
What about you – do you have any resolutions for your money in 2010?
{ 6 comments… read them below or add one }
Great tips. With my 401k plan, there’s an option to automatically rebalance on a regular basis (i.e. annually, semi-annually, and quarterly) and I’ve chosen the quarterly time period.
As far as credentials go, I finished a certificate program in personal financial planning last year, which I could possibly use to make a career change into that industry. I’m using that education to try and start a blog.
Other than that, my resolutions are to max out my 401k and IRA contributions this year.
Yet another great post filled with tips and tricks Bob! I especially appreciate your advice on getting a better bank account. As we move into Dave Ramsey’s third baby step (building a three to six month emergency fund), we could sure use a higher interest rate. Rebalancing your portfolio is especially important. Even simply being aware of what you have invested in the stock market will lead to making wiser financial decisions. Bravo.
I think I need to switch bank accounts this year. I want to go to ING but my hubby’s employer doesn’t do direct deposit so that would be a little bit of a problem
i just want to be wiser with my money than i have ever been so that i can have more at the end of the year(honestly i mean). so your advice is useful to me
I already broke what I considered my main financial new year’s resolution:
not to buy individual stocks and only ETFs.
I could not help it and buy Apple (I succumbed to the hype surrounding the imminent launch of the tablet).
The point on the credentials seem to be a crucial one. The economy is just making competition greater and greater.