Reviewing Investments Annually: Review The Past, Prepare For the Future

It’s that time of year again when the holidays are right around the corner, and everyone is looking forward to family time, bright lights and festive attitudes. However, it is also a time for investors to begin preparing for 2013, finalizing plans for 2012, and acting on any last minute tasks such as IRA contributions, Roth contributions, Required Minimum Distributions (RMDs), 401(k) contributions and estate planning updates.

These are only some of the options investors can review each year. Reviewing investments is something I practice and highly encourage with my clients. It helps to keep them on track with planning, updating and making changes. In fact, it keeps investors in check much like having an annual medical check-up.

Throughout our lives, we are constantly preparing for the future. Having evolved into a planning society, we plan marriages, having children, our careers and family vacations. We have learned that having plans in place is important. It is also important to have a process in place to monitor and evaluate a plan’s progress. A plan is only as good as the actions taken to reach its goal; this is why annual “check-ups” are needed.

Having a process in place helps organize planning and assists in adjusting or implementing new strategies. Taking the time to prepare for the future, plan and take action are key ingredients for individuals when investing. I would also recommend working with a financial professional or someone you trust who can review past, existing and future strategies. This can help investors to be objective about their decision making and keep them on track to meet their goals.

After setting some goals and implementing a plan, we then must keep an eye on our constantly changing economic environment. Some examples of changes happening in our economic environment:

• 2013 corporate sponsored plans are scheduled to allow a new max contribution of $17,500 (an increase of $500.00)
• traditional IRA contributions are scheduled to allow a $5,500 contribution (an increase of $500.00)

These are huge changes that can have a serious impact on current plans. Hence, having an annual review of personal and financial plans can help investors remain informed about new regulations and opportunities.

This year is a very important year because of the presidential elections, possible tax changes and retirement contribution changes. Although we can plan, there are still a lot of unknowns. In my experience, there are many factors that are out of our control. With that in mind, as investors, it is important to be mindful of our objectives and goals, and review them on a consistent basis.