The new year can be a great time to take steps to improve financial well-being. Where to start? By examining and updating key details of your wealth plan: budget, goals, and risk tolerance.
“Having a wealth plan is a way to gain confidence, which can contribute to physical well-being, since stress contributes to many health problems,” says Tracie McMillion, head of global asset allocation strategy at Wells Fargo Investment Institute. A robust wealth plan can also deliver benefits to your children or grandchildren and can lift the quality of your own retirement, as well.
Here are four ideas to consider that could boost financial well-being in 2021 — and for the long term.
1. Re-evaluate your retirement goals based on life changes
The coronavirus pandemic may have caused you to rethink your life goals. Some people have left the workforce earlier than planned, while others may be postponing retirement. Consider setting up a meeting with your wealth planner to discuss any significant life changes so you can adjust your investment strategies accordingly to stay on track for retirement.
2. Rebalance your portfolio
Investors should review their investments, especially if they haven’t rebalanced their portfolio in a while. As McMillion points out, “Equity markets have had a very strong rebound from their March 2020 lows. It might be time to take some gains and rebalance proceeds into other asset classes to match long term target allocations.” McMillion recommends scheduling time with your investment professional to discuss any potential changes and ways you might be able to have your portfolio automatically rebalanced.
3. Discuss financial well-being as a family
McMillion suggests sharing financial lessons with younger family members. Teens and young adults can benefit from talks about market fluctuations and the benefits of having a plan to address those changes. Some other topics of discussion might include career opportunities they might be interested in down the road, as well as the importance of a strong work ethic and a sound investment strategy. Introduce your kids to your wealth planner, who can help them begin to identify their own financial goals.
4. Invest in things you care about
Sustainable, responsible, and impact investments could benefit causes that matter to you while also giving financial well-being a boost, McMillion says. More companies are reporting on their environmental, social, and governance (ESG) practices, particularly as large institutional investors and a growing number of investment managers ask for this information. That means you and your wealth planner can assess whether those companies are living up to their promises to help make the world a better place.