Set Your Anti-Goals for 2018

While your neighbors are trying to keep their resolutions for the new year, we suggest you take a slightly different path. Think about the financial behaviors you want to AVOID in 2018. By resolving to NOT do a few things you can reduce your financial stress and improve your investment results. Here are some suggestions as the year begins.

Sometimes it’s what you don’t do that matters. In a previous article, we introduced the idea of “anti-goals” — undesirable outcomes you wish to avoid. Pursuing anti-goals can help you steer your actions and decisions away from potential trouble spots. For instance:

I will not check my portfolio balance every single day. It’s been fun watching balances grow during the long bull market, but paying too much attention to daily market moves can be very stressful when markets slide. If you’ve made a habit of checking your portfolio every day, this is a good time to break it.

I will not try to guess market moves based on headlines. Trying to jump in and out of the market to take advantage of short-term rallies and pullbacks is a great way to reduce your returns. Trying to time these moves based on the current news only makes it worse. The disconnect between headlines and market performance can be confounding. Read or watch the news to stay informed, but leave it out of your investment decisions.

I will not sabotage my retirement by overspending today. If you haven’t talked with your advisor about how much money you’ll need to fund the retirement you envision, you should. That conversation will help put into perspective the trade-off of spending today versus having money when you need it later in life. Yes, purchase a dream vacation home. Perhaps two residences is enough. Make sure you pay your retired self first.

I will not fall in love with an asset class because it has outperformed. “Past performance is no guarantee of future results.” This familiar disclaimer can be easy to ignore when stocks or gold or crypto-currencies are on a hot streak, but it is true. Yesterday’s performance does not predict tomorrow’s. That’s why we always suggest holding a diversified portfolio and periodically rebalancing to keep it aligned with your risk tolerance.

I will not keep financial secrets. Being fully transparent about financial matters can be difficult or embarrassing, but the alternative is usually worse. Don’t let hidden debts, secret accounts or other surprises damage relationships with the people you care about. Make a habit of open and honest discussion of your financial situation and goals.

We wish you a great 2018 and hope you achieve all of your anti-goals!