Investment Tips For 2018

While the U.S. media focused on the rise of U.S. stocks in 2017, it was actually international stocks that gave U.S. stocks a thumping. U.S. stocks gained about 21.6 percent. International stocks gained 27.4 percent.

But it’s now time to rebalance. Stocks have risen a lot. That means your portfolio allocation will have far more stocks than it did on January 2017. So, here’s my tip for the New Year.

Sell some of your stock market assets.

Add the proceeds to a short-term or broad market government bond market index fund. I know, I know. You probably don’t want to do that. “Bonds are dull,” you say. “Bond interest rates are low.”

Unfortunately, most people buy bonds after they have fallen. They like to buy stocks after they have risen. Investors, on aggregate, are a pretty crazy bunch.

If you don’t want to rebalance (because you’re starting to speculate) then hire a financial advisor to manage a diversified portfolio of index funds. They can do the rebalancing for you.

My book, Millionaire Teacher, shows what kinds of advisors you should use.

If you’re an expat, I’ve listed advisors you could consider in my newly released book, Millionaire Expat.

Have a great New Year!




 



Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School (2nd Ed. Wiley 2017) and The Global Expatriate’s Guide To Investing: From Millionaire Teacher to Millionaire Expat (Wiley 2015). My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I'm happy to comment on your questions. However, please read the Terms of Use, Privacy Policy and the Comments Policy.

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2 Responses

  1. Mario says:

    Hi Andrew,

    Thanks for all what you do here.

    How about if I don’t sell the winners to rebalance, but just add new money to the losers?

    This is a question I often think about but am not able to find a clear answer to anywhere.

    If I keep my holdings of the winning stocks and don’t sell any, then when the markets drop (and they will), I’ll lose some (and maybe much) of the gains and it’ll take an unknown period of time for the markets to climb back to where they were before the drop.

    I’m able at this time to add fresh money to my bond allocation to rebalance.

    Am I better off selling the winners and “bagging” the money?

    Any advice will be much appreciated.

    Thanks.

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