Morningstar's Financial New Year's Resolutions

It's the time of year where we make grand plans for the coming 12 months. We've asked some of Morningstar's finest to share their Financial New Year's Resolutions

Holly Black 19 December, 2019 | 9:11AM

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Whether it's a vow to join the gym, eat more heathily or make time to read, this is a time of year when many of us make grand plans for the coming 12 months.

But don't forget your finances when you're making your resolutions for 2020. In case you're in need of inspiration, we've asked some of Morningstar's finest for their Financial New Year's Resolutions: 

Reduce My Risk

Christine Benz, director of personal finance at Morningstar:

One long-standing item on my financial to-do list is to look at my husband’s and my asset allocation in total and determine whether we should reposition any investments. Our portfolio is quite equity-heavy relative to any sane recommendation for people our age, but we don’t pay much attention to the market’s short-term fluctuations and consider ourselves extremely risk tolerant.

But I’m mindful of the fact that the last time this tolerance was tested was more than 10 years ago during the financial crisis, when we were 10 years younger and 10 years further from retirement. If stocks go down and stay down for a sustained period, it will likely feel much different – and much worse – than it did on the last go round.

Be Prepared

Syl Flood, chief content strategist at Morningstar:

I need to rebalance my investments – part of the problem is that I own some turkeys (funds that haven’t flown) and I should really accept those mistakes and move the money elsewhere. Elsewhere, I vow to reduce unnecessary spend on home security, a landline phone and home insurance and, more morbidly, I need to write my will (sorry, I won’t be writing any of you in).

Finally, I need to buy a personal liability insurance policy. Someone tripped on a crack in the pavement in front of my friend’s house recently; the person sustained a head injury and my friend was sued. Yes, Americans sometimes live up to their litigious reputation. But luckily my friend had personal liability insurance, so the incident didn’t cost her – although the hassle was quite a distraction.

Save Money - And Calories!

Dan Kemp, chief investment officer at Morningstar Investment Management:

Most resolutions are broken very quickly, and often it’s because we think about what we want without thinking about how to achieve it and tend to think we can make lots of large changes at once and stick to them.

So, in 2020 I’m going to follow the advice I often give to others: change one small thing by identifying a better strategy to meet a specific need.

My one small thing is to bring a packed lunch into the office every day, something I’ve got out of the habit of over the past couple of years. Not only will this save me money – about £900 a year – but it will also save me about 40,000 calories a year, along with all that additional salt and sugar. It also means I’ll make lunch for my family rather than them having to do it themselves – let’s hope it lasts beyond the first rushed morning of the year!

Avoid Sibling Rivalry

Jon Miller, head of manager research at Morningstar:

I want to tidy up the Junior Isas, which I invest in for my two daughters. They were born 18 months apart and their portfolios aren’t quite identical, and neither is the performance. Although the returns haven’t been wildly different, I do regret not making sure the two accounts are investing in the same way.

We often ask relatives to give the girls a cheque at Christmas or birthdays which we can invest into the Isas – it’s sometimes an awkward conversation but it means we don’t have an overload of toys and it all goes towards their future.

Pool my Pensions

Holly Black, senior editor at Morningstar:

Considering the active interest I take in investments and in my Isa account, I am woefully uninformed about where my pension is invested. In 2020, I vow to take the time to actually choose where my money is going – this is, after all, what I’ll be relying on in retirement, should I ever get there. I also need to consolidate my pension pots - I have three - and it would make far more sense to have them all in one place, not least so I don’t have to read three pension statements every January.

On a day-to-day basis, I’m going to download a spending app that tells you where all your money is going each month. I suspect the app will very quickly tell me to just stop going into the Marks & Spencer food hall.

Ask an Expert

James Gard, content editor at Morningstar:

I would rather go to the dentist than talk to a stranger about money, but next year I’m going to have to take the plunge and see a financial adviser. I have inherited a lump sum – likely to be my only inheritance – but I can’t decide what to do with it.

Left to my own devices I would put in a savings account and take the 1% a year interest. I don’t want to pay someone to tell me to buy gold ETFs or sink it into a buy-to-let property, but I need an adviser to think of a constructive way of putting the money to work and help me overcome my natural risk aversion. While I want some capital preservation, I have an 8-year-old son and am thinking ahead 10 years to university and beyond and how I can invest the money to help him.

Put My Money Where My Mouth Is

Annalisa Esposito, data journalist at Morningstar:

Last year I took out a subscription to non-profit magazine Ethical Consumer and it made me think I should invest some savings I had in an ethical fund. I thought: why not put this money to good use, instead of letting it sit sadly in my bank account earning virtually no interest? I always wanted to have “an impact” on the world around me, and I felt that my monthly donation to Doctors without Border wasn’t enough.

But, I never did it – partly for lack of courage and knowledge, and partly through inertia and just never getting around to it.

I didn’t know much about investing and funds at the time but working at Morningstar has taught me the most important lesson: you don’t have to be a millionaire to invest, everyone can do it. Now I have a lot more confidence, I have started to invest in some stocks, and 2020 will be the year I finally invest in some ethical funds. 

Stay Positive

Gavin Corr, director of manager selection at Morningstar:

I am making a new year’s Brexit resolution that I am hopeful will prove to be fruitful financially, and that is to try and remember that bad news is often in the price of assets. Given that I live and work in the eye of the Brexit storm, it is often easy to become disheartened and pessimistic about the state of the UK.

But when I meet overseas fund managers, I am struck by the universally negative opinion they have on UK assets. It’s a stance that contrasts starkly not just with the value that many UK managers are seeing in domestic equities, but also with the global corporate world, who are increasingly looking at UK businesses to buy. The old adage “It’s darkest before the dawn” may apply again and 2020 could prove to be a good year for the UK.

Have a Difficult Conversation

John Rekenthaler, vice president of research at Morningstar:

I have four investment accounts, not including my wife’s, and my New Year’s resolution is to consolidate them. I’ve put it off because it’s not only something of an operational hassle, but it means moving money away from a financial adviser with whom I have a relationship. It’s not much of a relationship, to be sure, and I don’t make him much money, because I am a self-directed investor, but nevertheless I don’t relish that conversation.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author

Holly Black  is Senior Editor, Morningstar.co.uk

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