A Smart Start to the New Year

Monday, January 3rd, 2011 by Charles Mayfield, CFP®


A very Happy New Year to all of our clients, partners, friends and readers!  Hopefully the holiday season went off without a hitch.  After the champagne glasses and party hats have been put away, we like to help investors take a look at a few things that they can do now to get 2011 started off on the right foot.  Like my grandfather used to tell me, “You want to hit the ground running!”

Here are my Top 5 Ways to get 2011 started off with a bang:

#1. Start the Tax File

In the next several weeks and months, you will begin to receive important documents in the mail that you, or your accountant, will need to keep close by to prepare your 2010 taxes.  Get a file started so that when April rolls around you have each of these documents organized and accessible.  Schedule a discussion with your accountant now to be sure you’re on the same page as last year.  What’s changed?  What hasn’t?  How can you be best prepared for filing? You’ll thank yourself for these simple preparation steps come filing time.

#2. IRA/Roth Contributions

If you’re eligible to make contributions to either of these accounts, do so.  Did you make a 2010 contribution?  The sooner you put that money away, the longer it has to accumulate and grow.  Would it be possible to go ahead with your 2011 contribution also?  If so, you’ll need to write separate checks to the account.  The contribution limits are $5,000 if you’re 49 or younger and $6,000 if you’re 50 and over.  Put that money to work for you as soon as possible.


#3. Allocations/Contributions to 401k

Did you get a raise?  Great work!  Be sure to tweak your contribution percentage on your company retirement plan to maximize your contribution limit.  Cass recently touched on some common 401k Blunders that all investors should be aware of, so please review those.  You may also want to have your financial planner look at your portfolio to make sure your allocation is still in line with your long-term goals.  If you find that you do need to make a change, be sure and include current assets and future contributions for 2011.  One big change we are making to our client’s portfolios at present is a greater allocation toward the high yield bond space.  We are decreasing exposure to short term debt and re-allocating toward domestic and global high yield.   Many plans now allow you easily to make these changes online.

#4. Family Meeting

Set aside some time to sit down and put a plan together for the year.  Vacations, trips to the grandparents and business trips out of town are all important things to have on the calendar.  A simple meeting to get things on paper can keep everyone on the same page.  This is also a good time to go over the family budget.  Take this opportunity to show your kids how saving money on clothes, games and entertainment can lead to fun trips to the beach or Disney in the summer.

#5. Start Saving Now
Having just finished another year of holiday gift giving and vacationing, it’s a good idea to tally all those expenses up.   Savings accounts are inexpensive and most banks allow for automatic transfers to/from your checking account systematically.  Start accruing your holiday expenses now for next year.  This way, when the time comes for gift giving, you will have the money already saved.  Example:  I spent $600 on gifts this year.  Set up a savings account for gift giving and systematically transfer $55/month into that account.  You’ve got 11 months to save the money and hopefully you won’t miss the $55 each month.

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