With a new year comes new resolutions. Many people plan to exercise more or pursue better personal relationships with the changing of the year, but one hope nearly everyone shares is to improve their financial outlook for 2014. Keep these tips in mind to gain investment advantages and build wealth in order to end 2014 both wiser and richer.
The Downturn of the Dollar
With a great stock year and the dreaded fiscal cliff behind investors, some concerns do remain, and these include the strength of the dollar. While the currency was fairly stable throughout 2013, some financial analysts predict the return of the weak dollar due to low interest rates and a trudging economy. Dodge this dilemma by seeking out commodity investments, as well as companies which generate overseas income.
Do Diversify Investing in the 21st century economy is a whole new world — and it’s a global one. If you’re not investing with a global perspective in 2014, then you may be missing out on a critical opportunity to diversify into other prosperous markets. Seek out nations with good governance as well as promising past performance; also look for international brands which may be undervalued. Experts cite the European and Japanese markets as contenders for economic strength in 2014; by seeking out strong international brands which haven’t yet penetrated those markets, you position yourself to exploit serious earning potential.
In the U.S., the repercussions of changes to the tax rate — particularly at the top tier 39.6 percent rate for incomes exceeding $400,000 — are still being absorbed by taxpayers. Factor in the new Medicare tax of 3.8 on investment income, and investors need to educate themselves on their options to avoid getting slammed. Expert professional advice can help investors navigate these changes and make smart decisions that take the new tax code into account without sacrificing long-term financial security.
While meeting with a financial planner may not be this joyous, it can help you plan for a happier financial future.
Worthy Wheels Both the auto and airline industries were big performers in 2013, and many experts predict that this behavior will continue into 2014. With lower costs — due to the recession — and increased demand, both of these markets continued to exhibit skyrocketing sales. The commercial real estate market, meanwhile, is also expected to continue its recovery, although the pace may slow down from 2013.
A Balancing Act
Keeping your investment portfolio balanced is an important part of maintaining a smart allocation strategy. Asset allocations shift over time; if the gap exceeds five percent, take a closer look to determine that stocks, bonds and equities are where you want them for optimal performance. An investment rule of thumb advises a mix of 60 percent stocks and 40 percent bonds with more equities if retirement is not on the near horizon.
Money doesn’t grow on trees, and trees don’t grow on money…savvy financial planning is critical.
While 2014 is expected to be volatile, keep in mind that maintaining a long-term perspective helps performance more than adjusting for a particular one-year period. While these tips may help you build wealth in 2014, staying ahead is a matter of continued vigilance over many years.
Joanna Hughes is well-researched in areas related to accounting and investments. She provides posts for Intuit UK and other internet sites.