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Spring is in the air, and New Year’s Day is just a memory. Despite the “late” date, however, perhaps it is time to make some resolutions about enhancing the bottom line. According to the “government-made-easy” site (www.usa.gov), we seem to remake a dozen or so personal resolutions year after year. Here is a different slant on those same resolutions you can apply to your investments and finances. And, if you keep your resolve, you will keep your finances on track throughout the rest of 2008.

1. Lose weight. Put your investment portfolio on a diet. In other words, get rid of the fat and keep it off. Look carefully through your list of investments. Are you keeping stragglers just because they have been there for years? There is no better way to clean up and rebalance a portfolio than to get rid of nonperforming positions. Make a list of stocks, bonds, and mutual funds that do not meet your investment objectives. Be critical, and maybe even a bit brutal, and cut the unnecessary load.

2. Pay off debt. Be careful not to overborrow. While you can utilize margin for good reason, it is not appropriate for most investors. Make sure your investment accounts are free from margin debt and commit to paying outstanding loans. Close positions you bought on borrowed money. If you have been accessing the margin features of your brokerage accounts to pay bills, stop now.

3. Save money. It is time to stop paying high commissions and fees. No one should pay the high costs associated with front- or back-end loaded mutual funds. Of course, even with no-load funds, managers will take some type of fee, but be careful not to pay higher than the average for funds within the same objective category. Consider utilizing low-cost index funds and ETFs (exchange-traded funds) this year. Also, talk with your stockbroker about reducing fees associated with stock and bond trading. Today, several reputable and very accessible deep-discount brokers offer substantial savings as an alternative to the high costs associated with traditional stockbrokers. 

4. Get a better job. Well, perhaps not literally, but you can take a closer look at your “job’s” benefits. Are you maximizing the plans available? Is your 401(k) receiving the maximum amount of annual contributions from all sources? Did employee-classified premiums shift to a pretax basis? Meet with your benefits broker to review the plans available and see if you are participating fully with all that may fit your needs.

5. Get fit. “One-two-three-four, I will review my finances more and more!” It’s time to commit to reviewing your finances on a regular basis. Avoiding statements and allowing for “financial-lethargy” will get you nowhere fast. Just as it is good for your body, exercise is good for your pocketbook. Spend at least one to two hours a week reviewing your finances and making sure you understand where you stand. Review statements, confirms, and mail related to your finances to ensure that your plan is on track, each and every week.

6. Eat right. It is said, “Eat a bagel; look like a bagel!” The same is somewhat true with regard to your portfolio: “Buy lousy investments; have lousy investments.” Look carefully at the ingredients (fundamentals) that make up the companies you are buying. Look at the ratios, management, and overall health of the company before you decide to add it to your portfolio this year. 

7. Get a better education. Commit to reading three investment books this year. Start with the basics and work your way toward the more advanced topics. Check out an online bookstore’s bestseller list in the area of investing and money management, or go to your local library and see what is getting good reviews. Subscribe to a few featured business-investing podcasts and learn about areas of finance you may not be familiar with.

8. Drink less alcohol. All too often we become intoxicated on our own success. We tell stories about profitable trades and forget about losing ones in an attempt to show off our stock market prowess. Stop reveling in your success stories and begin looking at the bigger picture. While many discussions on golf courses and shuffleboard courts are full of recent stock winners’ tales, start asking about the losers in an effort to start allowing the real stories to show through. Here is a twist: Ask your friends and colleagues to tell you about one loser for every winner they brag about. (Good luck with this one!)

9. Quit smoking now. “Red hot” and “smoking” are adjectives that describe many stock tips. Unfortunately, these often turn out to be big, ugly losers that eventually need to be sold for a deep loss rather than helping provide for an early retirement package. Stay clear of any friendly advice that seems too good to be true. Ask yourself why you received this amazing inside information. Then, ponder how it is possible that this particular penny stock will be $100 within a few weeks. Finally, the next time someone tells you: “This one is going to be the next Google,” simply say you will think about it.

10. Reduce overall stress. You don’t have to feel high levels of stress when your portfolio is riding the market roller coaster. Reduce portfolio volatility by diversifying your investments and adding positions that can hedge risk. Make sure you have separate and distinct investment positions that cover the wide gamut of asset classes, sectors, and industry sectors. If you are unsure if you have done a good job, seek professional advice to help review your holdings.

11. Reduce stress at work. Stop checking your positions every 20 minutes. Focus on your patients and be patient about your portfolio. Change your office computer’s home page to something outside of the finance world. Average investors do not have to check their portfolios continually. Let the stew simmer for a while. Nothing is going to change by compulsively checking portfolio values and stock prices throughout the day.

12. Take a trip. Plan to visit your investment advisor and commit to taking a good look at your portfolio. Review your tax plan, revisit and discuss your estate plan, and ask if there have been any changes within the tax and investment areas that may be of benefit.

Be sure to ask about new tax initiatives as well as strategies that may help create additional efficiencies. Dr. Bernard Davidson, a family psychologist at the Medical College of Georgia Health System, provides simple advice on how to help keep your resolutions well beyond the first week of any new year: Commit, prepare for setbacks, and track your progress.

Click here for an investment goal calculators to determine how much your investment might grow before taxes, after taxes, and after taxes and inflation.  It will also provide suggestions on what to change if your plan doesn't look like it will meet your investment goal.

Andrew Horowitz, CFP, is the president and founder of Horowitz & Company, and a registered investment advisor. He uses high technology and hands-on expertise to help his clients create the kind of plan needed in today’s financial world. Author of The Disciplined Investor  (HFactor Publishing, Nov. 2007), he can be reached at 954-349-0800 or by e-mail at info@thedisciplinedinvestor.com.

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