How to Reset and Refocus your Investment Portfolio for 2021
A new year brings in new opportunities to grow and develop yourself, in all aspects of your life. These are normally quantified through new year’s resolutions or setting personal goals that you wish to achieve during the new year. Whilst a new year brings a proverbial clean slate, it is important to reflect on the previous year and take into account the impact that the previous year has had on your goals and objectives in order to manage your future expectations. Just as we set personal goals such as changing our diet, quit smoking or changing our lifestyle, we also need to do the same for the financial aspects of our life. Below are some investment tips for 2021 that will allow you to reset and refocus your financial portfolio.
· Go back to the beginning – Many of our financial goals were set out years prior to last year. An example of this would be retirement planning, which can consist of decades of planning or alternatively specific goals that were set 5 years ago, such as the purchase of a property in 10 years’ time. It is important to reflect on what our long, medium and short-term financial objectives are and determine how all these objectives come together in the bigger financial picture.
· Reflection – before we get too short-sighted about the flavour of the minute (such as Tesla or Bitcoin) and go all in, it is important to reflect on what our initial investment objective or strategy was and how relevant our current position is in relation to that strategy. Are we on track or do we need to make enhancements?
· Upgrade your knowledge before your portfolio – Before making spontaneous, knee jerk adjustments to your portfolio (which can have a ripple effect down the line), it is important to understand what factors or events may have had an effect on:
· Your previous years’ financial performance
· Why these caused markets to behave the way they did
· The extent of the impact this had on your portfolio
· What financial constraints you may have experienced
· What you can do to improve your financial position or diversify your risk going forward
Once you have a better understanding of these factors and market fundamentals, you can then make an informed decision as to the best course of action to take in the new year.
· Revamp – With points 1,2 and 3 in mind, it is important to make the necessary and relevant upgrades to your portfolio or refocus your financial objectives to ensure that your initial objectives are still attainable, realistic and within your original investment horizon. This can include a rebalancing of a portfolio, the addition of new funds, the omission of non-performing funds or a combination of the above. However, when revamping your portfolio, it is important to stick to your overall investment strategy, ensuring that any upgrades or enhancements put you in a position to achieve your financial objectives.
With these simple 4 steps mentioned above in mind, you should be in a better position to realign your investment portfolio in the new year in order to ensure it correlates with your financial objectives. This refocused approach is key to ensuring a concrete platform that will allow you to achieve your financial objectives and ensure you tick all the right boxes when it comes to evaluating your financial performance at the end of the year.
Remember, after witnessing the markets in 2020, there are some incredible opportunities out there, so seeking expert help will ensure you pick the best investments in 2021.
You can also visit my recent blogs on both the technical point of view in 2021 and also whether sitting in cash is the right thing to do. I also include my investments tips for 2021 and point of views on the different sectors, so check them out!
About Mike Coady
Mike Coady is an expat expert based in Dubai and is on hand to help with all of the above and more.
Mike is an award-winning money coach and industry leader in the financial sector.
Qualified to UK Financial Conduct Authority (FCA) standards, a member of the Chartered Insurance Institute, a Fellow of the Institute of Sales Management (FISM), a Fellow of the Institute of Directors (FIoD), and featured as a highly qualified Financial Adviser in Which Financial Adviser.
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Blog published by Mike Coady.