Take these 3 steps to earn higher returns in 2019, no matter what the markets do.
1. Save More
A lot of people are not prepared for retirement. The single biggest reason is they haven’t saved enough. Millions of people today believe that the government will deliver the material happiness they deserve, but this is no path to financial security. The average retired worker receives too little to live a comfortable life when they are old. To ensure a comfortable retirement, save as much as you can, for as long as you can, starting as soon 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 an unmanaged benchmark. Over periods of a decade or more, more than 95% of them fail. Do you really want to pay hefty fees to someone with less than a 1 in 20 chance of delivering the goods? That makes no sense. The goal is for you to get rich, not your bank, broker or advisor.
3. Rebalance Your Portfolio
Despite the recent correction, the stock market has made a remarkable run since it bottomed nearly nine years ago. That means you may now have more in stocks than you’d be comfortable with in a prolonged downturn. So rebalance your portfolio. Rebalancing means you sell back those asset classes that have appreciated the most and put the proceeds to work in asset classes that have lagged the most.
This is a contrarian exercise. And it has one major salutary effect: 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.