3 steps to take to earn higher returns this year, no matter what the market does.
1.) Save more
To ensure to meet your financial goals or even a comfortable retirement, you should save as much as you reasonably can, starting as soon as you can and continuing for as long as you can. Unlike the performance of the stock and bond markets, saving is under your control.
2.) Cut your investment costs
Every year, 3 out of 4 active fund managers fail to outperform their unmanaged benchmarks. Over periods of a decade or more, more than 95% of them underperform. Don’t pay hefty fees to someone with less than a 1:20 chance of delivering the goods. Investment fees and returns are inversely correlated. The more your advisor makes, the less you do. The goal is for you to get rich, not your broker.
3.) Rebalance your portfolio
Rebalancing means you sell back parts of those asset classes that have appreciated the most and put the proceeds to work in those that have lagged. This is a contrarian exercise. And the main effect is that it forces you to sell high and buy low. This adds to your long-term returns while reducing your risk. When the cycle turns, as it always does eventually, you’ll be glad you did.
Sven Franssen