Irwin Consulting Management in Singapore and Tokyo, Japan’s 7 Investing Moves You Need to Make by December 31
Whenever things are going really well — as is the case right now on Wall Street and probably in your retirement portfolio — it's only natural to want to leave things be. Why try to fix what's not broken? But even the most patient buy-and-hold investors understand that you must revisit your strategy from time to time to make sure things are unfolding as you originally envisioned. The end of the year, when your thoughts are naturally focused on family, the coming year, and to-do lists, is a perfect time to do just that. To make this process easier, MONEY has put together a checklist of seven important steps to take now before the year ends to set your investment portfolio up for 2018 and beyond.
1. Remember to give yourself a raise.
Chances are, you got a slight bump in pay this year—perhaps a modest cost-of-living adjustment or a merit raise. Average pay for American workers rose a little over 2% over the past 12 months.
If you can, boost your 401(k) savings rate by that amount in the New Year.
The beauty of an employer-sponsored 401(k)—especially one where you're automatically enrolled—is that inertia works for you. You don't have to keep remembering to sock away money into your retirement account. Your company automatically does that for you with each paycheck.
But inertia cuts both ways. If you simply stay the course and fail to raise your contribution rate periodically, you're leaving money on the table. That's because over time, being an aggressive saver and mediocre investor beats being a good investor with just average saving habits.
Case in point: A 35-year-old making $75,000 a year, putting 7% of pay in a 401(k) and earning a better-than-average 10% annual return would have nearly $1.2 million after 30 years. That same worker who socks away the recommended 15% of pay while earning more-typical 7% annual gains winds up with $1.4 million. "Your goal should be maxing out your retirement contributions. If you can't do it all at once, adjust your savings rate gra