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Make a financial plan for the new year



Four expert advice you can use to build your financial year

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What can you do to make 2023 your best financial year ever? While we can’t control the rate of inflation or the threat of recession, we can give you some great financial advice—courtesy of two financial planners, who told us what’s on their minds as they help their clients plan for 2023.

We spoke to John Shrewsbury, Retirement Income Certified Professional® (RICP) and partner at GenWealth Financial Advisors, and John Morrison, Chartered Financial Analyst (CFA) and Head of Portfolio Management at Secfi.

Here is some of the advice they are giving their customers this year. And here’s how you can incorporate their advice into your own financial planning.

In this article:

Focus on what is important to you

Shrewsbury advises clients to worry less about how the economy is doing and to stay focused on their own financial goals, whether that’s saving money, building their retirement accounts or meeting other financial New Year’s resolutions. “Financial headlines can sound scary, but they often have little to do with your month-to-month well-being.”

Instead of basing your financial plans on what the markets are doing or what the experts are predicting about inflation, ask yourself how well you’re sticking to your budget, saving for the future, and managing your financial risks. “Focus on your financesin contrast to the economysays Shrewsbury.

Morrison advises clients to manage economic fluctuations by thinking long-term and letting compound interest do its job. “The best way to deal with inflation and the threat of recession is to set an investment strategy that you can stick with for the long term and then actually stick with it. Put the power of human creativity and compounding in your corner.”

If you want to learn more about setting effective financial goals, read our guide to financial resolutions for 2023.

Avoid selling investments in a bear market

We’re still in a bear market, which is good news for people who like to buy low – but bad news for people who are ready to sell. If market volatility worries you, remember that you don’t necessarily need to sell any of your stocks, bonds or investments until the market improves.

“Investors need to understand that it’s not a bear market that causes permanent damage to their portfolio, it’s having to sell assets in a bear market,” explains Shrewsbury. “Selling locks in losses and makes them permanent.”

If you’re interested in selling your losing investments, Morrison suggests taking advantage of tax loss harvesting, which allows you to use your investment losses to lower your tax burden.

“Tax loss harvesting is top-of-mind,” Morrison told us. “The markets are down, so there are likely opportunities to harvest your losses and reduce your tax bill this year. Plus, you can also set yourself up for lower taxes in future years.”

Once you’ve sold your investments, you can put the money right back into the market – but be careful not to put it into a substantially identical investment, or it could be considered a wash sale and you might not be able to claim your loss on your tax returns. “When reaping losses, people should definitely be aware of wash sale rules,” explains Morrison.

If you want to know more about how to navigate our current investment market, we have a detailed guide on how to handle a bear market in your 20s, 30s, 40s and 50s.

Avoid expensive properties

If you are planning to become a home owner in 2023, be aware that you are buying into an extremely high real estate market. While there are still opportunities for first-time buyers, this may not be the year to consider investing in a larger home – or buying a second property for rental purposes.

“In terms of the housing market, we would advise our clients to consider the increased monthly cost of financing a home due to the rapid increase in interest rates,” explains Shrewsbury.
Additionally, homes have not significantly retreated from the record high prices of last year, which would give us pause in recommending a home for investment purposes.”

If you’re considering buying a home in 2023, make sure you’re taking steps to protect your mortgage in a worst-case scenario – and if you’re considering an adjustable-rate mortgage, read our guide to the pros and cons of ARMs.

Build a balanced financial portfolio

How can you build a balanced financial portfolio in 2023? First, make sure you have an emergency fund set aside in a high-yield savings account. Then pay off any outstanding credit card debt. That way, you’ll be able to make long-term investment moves without worrying about running out of cash or racking up high-interest debt.

When building your portfolio, remember to divide your investments into three categories – low risk, medium risk and high risk. These types of investments generally provide low, medium and high returns and are the basis of a long-term investment strategy.

“We recommend that clients use their investable assets to create a time-based, tiered risk strategy that allocates funds into three separate buckets,” explains Shrewsbury. “This allows some money to go into low-risk assets that can be used for short-term discretionary spending. Over time, we would reap profits from moderate and growth buckets to replenish the low-risk investments that have been spent in the short term.”

If you’re not working directly with a financial advisor on your investment strategy, a roboadvisor can help you set your buckets and manage your portfolio. You can also manage your portfolio on your own, using target date funds or index funds to help keep your risk levels balanced.

However, don’t try to time the market. “Timing markets and market moving events is a dangerous game to play,” says Morrison. “It usually doesn’t end well.” Instead, start the new year by focusing on your own goals, managing your own risk and making long-term investments in yourself, your career, your savings and your retirement.

If that includes finally getting life insurance to provide financial protection for your family, or taking other important estate planning steps like creating a will, there’s no time like the present. That’s the way to make 2023 your best fiscal year ever.

Our editorial policy

Haven Life is a customer-centric life insurance agency supported and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe that navigating life insurance decisions, your personal finances and overall well-being can be refreshingly simple.

Our editorial policy

Haven Life is a customer-centric life insurance agency supported and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe that navigating life insurance decisions, your personal finances and overall well-being can be refreshingly simple.

Our content is created for educational purposes only. Haven Life does not endorse the companies, products, services or strategies discussed here, but we hope they can make your life a little less difficult if they fit your situation.

Haven Life is not authorized to provide tax, legal or investment advice. This material is not intended to provide and should not be used for tax, legal or investment advice. Individuals are encouraged to obtain advice from their own tax or legal advisor.

Our disclosures

Haven Term is a term life insurance policy (DTC and ICC17DTC in some states, including NC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and offered exclusively through Haven Life Insurance Agency, LLC. In NY, Haven Term is DTC-NY 1017. In CA, Haven Term is DTC-CA 042017. Haven Term Simplified is a Simplified Issue Term Life Insurance Policy (ICC19PCM-SI 0819 in some states, including NC) issued by CM Life Insurance Company, Enfield, CT 06082. Police and driver form numbers and features may vary by state and may not be available in all states. Our agency license number in California is OK71922 and in Arkansas 100139527.

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