Resolved: to do a better job managing investments in the New Year.
So, what are the key things to keep in mind?
The most important is that long-standing rules for saving and investing are probably still sound, despite bad experiences of the past decade like the drop in home prices and abysmal stock-market returns. Over the long term, stocks are likely to continue beating bonds and bonds will probably beat cash.
The most important step to growing a nest egg: increase your savings rate. We don’t know for sure that stocks will again return 10% a year, their average for most of the 20th century, but it’s a safe bet that saving more now will leave you with more in 10, 20 or 30 years.
Other key moves:
U.S. stocks, measured by the Standard & Poor’s 500, have gained almost nothing over the past decade, but emerging-market stocks have had some stupendous gains — more than 13% a year for the past five years. Most financial advisers say investors should have 10% to 40% of their stock portfolios in foreign issues.Dollar-cost average
This means investing the same sum at regular intervals, as many people do with monthly 401(k) contributions. This strategy imposes discipline, getting you to invest when prices are down and you are jittery. And a given sum buys more shares when prices are down, fewer when they’re up. Over time, that helps minimize the average price you pay per share.