By J.P. Dahdah, Founder & CEO of Vantage
New Year, New Investment Strategy: 3 Questions to Ask Yourself About Your IRA
Millions of Americans made investment choices pre-pandemic which, given the multitude of changes that have transpired and continue to take place, should be re-evaluated. Especially since IRAs and 401(k)s are commonly treated as a “set it and forget it” approach by most. It’s time to evaluate your investment strategy.
While retirement accounts are structures to be utilized for long-term investments, the decisions made along the way matter every year to ensure the chosen assets continue to support the desired financial objectives. Additionally, it’s important to continually evaluate what’s going on with your retirement portfolio holdings, especially if you are older because you may be tapping into it sooner than later.
In an effort to ensure you are performing sound financial management, ask yourself these 3 important questions about your IRA and help yourself avoid common investor pitfalls.
Question 1: When was the last time you really looked at your IRA?
Regardless of whether or not you pay a financial advisor to help you with your finances, it is important to create a personal habit to review your overall retirement portfolio to evaluate if your holdings achieved the projected results. No one is going to care more about your money than you do. That said, you must play an active role each year in determining if any circumstances in your life should drive changes to your investment selections.
Have you had a change or loss in employment? Should you increase your salary deferrals to your employer’s 401K plan due to a pay raise? Do your investments have too much exposure to non-performing sectors (i.e. restaurants, hospitality, airlines, etc.)? Is your portfolio positioned to take advantage of opportunistic industries (i.e. technology, biotech, healthcare, etc.)?
Question 2: What are your financial goals, and have they changed since you last analyzed your IRA or retirement plan?
2020 is a year many of us will not soon forget. It delivered a lot of volatility in various financial markets and political and economic unrest around the world. For many, it also forced a shift in mindset about what was truly important in their lives. How did it affect your financial goals? Does your investment and savings strategy need to be amended to align better with where you stand today?
Financial goals need to be SMART: Specific, Measurable, Attainable, Realistic and Timely. Drastic macro-economic environments can lead to a major audit of our personal micro-economic realities. Has your risk tolerance, time horizon and investment appetite changed in the new post-Covid era?
Question 3: What trends in 2021 do you anticipate impacting your retirement plan or investment strategy, and have you accounted for these in your investment strategy?
Many unanticipated trends are in full force today. Companies like Zoom, Beyond Meat and WeWork have been significantly affected as a result of Covid-19. Are you keeping an eye out for companies or industries that may experience massive gains or losses in lieu of our current environment?
Perhaps there are tech companies that will become household brands because they will gain major market share in the Work From Home (WFH) protocols. Do you have an overconcentration in retail real estate holdings or airline companies? Is there too much overlap in your portfolio among mutual funds you own causing additional risk exposure across multiple holdings?
Remember, hope is not a strategy. Be sure to take a deep dive into your current retirement accounts and ask yourself the tough questions that may prevent you from waiting too long to make appropriate adjustments.
If you want to review your current investments with Vantage or would like to open a new account, please call us at (866) 459-4580 or email us at Info@VantageIRAS.com.
By J.P. Dahdah, Founder & CEO of Vantage