By Kayleigh Yerdon, Summer Intern 2015, Cornell University Let’s start by saying, happy 2016, everyone! The stroke of midnight that kicks off each New Year inevitably comes with a variety of questions and personal assessments. The start of 2016 will be no different. Amidst the chaos of ringing in a new year, many of us may have found ourselves asking, what can I change to make next year better than last year? Where do I stand in terms of reaching my long-term goals? And most commonly, what resolutions can I make in order to improve myself in the coming year?
Many people make New Year’s resolutions. The most common resolutions as we began 2015 were things like “get fit” and “eat healthy.” In fact, nearly 70% of those polled going into 2015 had made similar resolutions. While people are busy making changes for the New Year, people overlook changes that the New Year might make for them – especially financial ones. Things change as time goes by, after all! Here is what the turn of a new year could mean for you financially:
New Year, New Allocation
Although the Dow ended almost unchanged, globally the markets had a volatile 2015. As the markets moved, the assets and asset classes represented in your portfolio may have shifted accordingly. The percentages of each asset or asset class represented in your portfolio now may be very different than the percentages you began with. You should regularly rebalance your portfolio (at the beginning of each year or more often, depending on your strategy) in order to stay in line with your risk tolerance.
Welcome to Bonus Season
The New Year is known to coincide with bonus season for many people. If you have recently received or are expecting a bonus – now is a good time to make a plan for what to do with your extra money. Use your bonus to pay off debt or put a little extra cash into your investments – any extra, unexpected money can help!
A Global 2016
Look at national trends. Get up to date with international developments and the news. 2016 may be the year for you to not only keep investments in your home country, but also start to invest globally. Whether it’s the successes of certain national industries or exchange rates between other countries and your own – this year might start you looking to further expand and diversify your investment portfolio.
Look Out For Rate Hikes
And speaking of rate hikes – a recent US rate hike and talk of future interest rate increases will no doubt spark some volatility in the markets in 2016. This is certainly a big change coming out of 2015, especially since 2008 was the last time the Federal Reserve changed interest rates. So, going into 2016, you may want to consider this volatility and factor it into your personal investing plan. If volatility scares you, you may consider choosing a less risky investment strategy.
With the turn of a new year, it is also wise to review your automatic bills. Have you subscribed to any magazines, music streaming services, or other paid programs? You should consider checking your subscriptions at the end of each year, assessing which ones you still use, and searching for better competing deals. This way you wont be automatically re-subscribed (and re-charged) for services that you no longer use.
Have a Plan
As you walk into 2016, remember to keep a little extra money for surprises. You never know what’s in store for you this year (hopefully good things!), but you always want to be prepared.
As you begin making your own New Year’s resolutions and changes, keep in mind the changes that come inherently with each New Year. The New Year can certainly mean new things for your finances and investing strategy. We wish you a happy, healthy, and financially successful 2016!