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New Year Financial Resolutions for investors in 2023

8 Mins 21 Dec 2022 0 COMMENT

Before the year ends, many individuals reflect on the past year and think about the changes they would like to make in the upcoming year. For many people, the new year resolution goals pertain to eating healthy, being more active and bringing about other positive changes in their lifestyle.

It is important to focus on your physical and mental health, but at the same time, it is equally important to set resolutions that will help you make it through the next year with good financial health. Here are some financial resolutions you can adopt as an investor.

Set financial goals

One of the most important things an investor or an individual can do to be financially healthy is to create a financial plan and set up goals. These financial goals should be achievable and measurable. Having a sound financial plan can not only help you make decent investment decisions but can also help in budgeting and saving more money.

Research every investment opportunity

As an investor, spending quality time researching investment opportunities is very important. Although it is difficult to examine every stock or asset class, investors should shortlist a few securities and do their research and analysis before investing their hard-earned money. It is crucial to assess and research the different aspects of the potential investment.

Upskill yourself

A person can never stop learning. This statement falls true for investors as well who want to learn how to make money in stocks, bonds, mutual funds, etc. With changing market dynamics, an investor needs to change and grow along with it. Investors need to keep learning more about technical analysis and investing strategies. Grabbing the knowledge of coding and algorithmic trading can be helpful as well.

Follow proper risk management

One of the keys to being a successful investor is to manage your risk efficiently. Any investor should adhere to solid risk management principles, no matter how big or small the capital is. Knowing your risk appetite is a prerequisite for investing in the financial markets. Any investment should be made if it fits your financial goals and is within your risk profile. Having a strict stop-loss is advised to avoid unnecessary losses. Working on managing your risk will help secure returns in the upcoming year.

Avoid FOMO

Many investors often feel the fear of missing out, widely known as FOMO, which affects their investment decisions. Investors might see their peers, friends or relatives getting significant returns from an investment. This might cause them to feel that they are missing out, and if they don’t invest in it now, they might end up losing a good opportunity. This might lead the investor to make hasty investment decisions without doing their own research or analysis. In most scenarios, the investor would be late to the rally and would be stuck in the investment or would face a loss.

Inculcate patience

Patience is one of the most important qualities an investor can have. The markets are not always stable. Global events, geo-political tensions and other micro or macroeconomic factors can affect the value of your investments. In such situations, investors would sell their investments even though the investment horizon is for a long term and prices would normalize. Having patience in the markets is often rewarded. Therefore, it is a quality that an investor should inculcate in the coming year.

Avoid greed and fear

Avoiding the emotions of greed and fear goes hand-in-hand with having patience. While investing, an individual’s psychology plays a really important role. If the investment is performing well and achieves the intended goals, an investor should book the profits and exit. Similarly, if a trade is losing, it is advisable to exit the position instead of holding on to it and burning money. Fear can even lead an investor to exit a winning investment early and book lesser profits. An investor might lose out on even the profits that they have made simply because of being greedy for more profits.

Rebalancing and diversifying your portfolio

Every investor can take an investing resolution to review and rebalance their portfolios, including many asset classes. By reviewing your portfolio, you can rebalance the weightage and asset allocation. Furthermore, an investor should also look at diversifying their portfolio. Investing in various asset classes can be helpful in getting through volatile market conditions, minimise risks, and generate higher returns.

Being wary of investment scams

With a large influx of investors in recent years, the number of investment scams has increased. As an investor, it is important to exercise caution and also help others who might be susceptible to falling for an investment scam. It is also advised not to make investments based on tips from unlicensed advisors. Learning and warning others about investment scams can be a good new year resolution goal to have.

In conclusion, these resolutions will help you be financially healthy throughout the upcoming year. Additionally, they can help in developing certain skills and qualities that will help you make sound investment decisions.