The end of the year is upon us, which means it’s time to make all those New Year’s resolutions we know we’ll never keep.
A recent study by Fidelity Investments, however, found that a large portion of Americans are targeting financial well-being going into the new year, trumping the classic health and fitness goals.
“In today’s uncertain economic environment, it is important for Americans to focus on what they can control, versus what they can not,” Luke Vandermillen, vice president of retirement and investor services at the Principal Financial Group, said. “Having a financial strategy and actively saving for financial emergencies and retirement can help reduce many of the pressures and anxiety many are feeling today.”
Another survey from Principal Financial Group found that from a group of working people, 21% of them were going to cut spending by a certain amount each month. Rachel Koning Beals for U.S. News reports that going into the new year, 26% of the group cited saving a certain amount of money each month as a top priority, as well as paying off credit cards.
Furthermore, a different study by Fidelity Investments concluded that 84% of respondents thought that the U.S. is already in or will soon be in a double-dip recession. This leaves many investors feeling unable to make the right investment decisions due to the market volatility and general depressed sentiment.
According to the study, 85% of Americans are going to continue saving even when the economy turns around. Likewise, retirement savings are a huge goal Americans are striving for.
The simple step of taking control of ones’ investment portfolio by properly diversifying and keeping a simple but structured strategy in place will help. ETFs are a useful tool because they can serve as a long term buy-and-hold investment and do not cost investors as much as other actively managed funds. ETFs can also trade smoothly like a single stock and target specific sectors and asset classes for good diversification. [What are ETFs? -How Diversification Reduces Risk]
Furthermore, a strategy is important to help investors deal with market volatility. By defining an exit strategy and setting a stop-loss, investors can help cut the risk involved with emotionally charged investing, common during periods of market swings and trendless markets. [ETF Inflows up 54% in 2011]
A simple trend-following strategy, such as following the 200 day moving average of an ETF, can also help outline when to enter or exit a fund.
Tisha Guerrero contributed to this article.